Lyon Homes to file for Chapter 11

William Lyon Homes, the Newport Beach, Calif.-based developer, announced last week that it will file for bankruptcy protection, the Orange County Register reported. The filing is part of a debt reorganization plan that will likely give control of the company, run by Orange County builder Gen. William Lyon, to a New York hedge fund.

Lyon Homes announced that “it has commenced the solicitation of votes for a prepackaged plan of reorganization to facilitate its recapitalization and ensure it remains a leading homebuilder for years to come.” The plan is to quickly exit bankruptcy with a new financial structure by the end of the first quarter 2012.

Lyon Homes added that this plan “contemplates no impairment of any business relationships and full payment of all obligations to the company’s business partners, vendors and employees.”

Two weeks ago, Lyon Homes and its key financial partners agreed to a recapitalization that would bring in $85 million in fresh cash and shrink and extend Lyon Homes’ debts.

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