Lenders support Kimball Hill's bankruptcy plan

Kimball Hill Inc., the second-largest homebuilder now in reorganization, said in a court filing this week that its pending Chapter 11 plan has support from the agent for the secured lenders and the unsecured creditors' committee.

The company expects confirmation of the plan will occur in mid-March, assuming the bankruptcy court in Chicago approves the explanatory disclosure statement at the previously scheduled Jan. 13 hearing.

Just in case unanticipated events delay confirmation of the liquidating plan, Kimball Hill at the Jan. 13 hearing will also ask the court for an extension until April 16 of the exclusive right to propose a plan.

The plan is built on a settlement of a threatened lawsuit where the creditors' committee would have attempted to turn the secured lenders into unsecured creditors for the $315 million they are owed.

The plan projects a 37 percent to 48 percent recovery by the secured lenders owed $315 million. Senior unsecured creditors with $43.6 million in claims could see between 29 percent and 36 percent.

General unsecured creditors, owed $131 million, are to recover between 17 percent and 20 percent.

The holders of $211 million in subordinated notes are to have 1 percent, though only if none of them objects to the plan and the class votes in favor.

Before deciding to liquidate, Kimball Hill was attempting to reorganize until the "crisis in the financial markets" created a "major distraction" toward the goal of nailing down a plan sponsor, according to a company court filing.

Kimball filed for reorganization in April in Chicago and listed assets of $795.5 million and debt of $631.9 million as of Dec. 31.

The case is In re Kimball Hill Inc., 08-10095, U.S. Bankruptcy Court, Northern District of Illinois