A bankruptcy judge has allowed four major creditors to take back approximately 300 building lots in Maryland and Virginia from the Chapter 7 liquidation of Regency Homes Inc. and its affiliates, a move that gets homebuyers a step closer to a resolution in one of the largest homebuilder debacles ever in Maryland.
Judge S. Martin Teel Jr. signed off on a motion of sale Friday from Zvi Guttman, trustee for the estate, that allows Provident Bank of Maryland, Sterling, Va.-based Bank United, First Union National Bank and Ohio Savings Bank of Cleveland to take back their lots in exchange for $21 million in secured claims against the estate.
However, Bankers Trust Co. of New York, which has more than $20 million in secured and unsecured debt with Regency, has yet to come to any agreement, according to Guttman, who added that negotiations would continue. Bankers Trust holds rights to 90 to 100 "spec" homes that are nearly complete.
The four banks also included in their agreement $550,000 to go toward satisfying administrative expenses as well as employee, trade and consumer claims against Regency.
The deal with the four banks also effectively kills a proposal made in August by Washington Homes Inc. of Landover to purchase the assets of Regency for $25.5 million. Guttman said the banks balked at the Washington Homes proposal for not being more lucrative, saying their portion of the purchase would total $16 million, but the principal value was $21 million.
Guttman expects to close the agreement with the four banks next week and at "that point each bank will have to have a story of what they are going to do" in terms of dealing with buyers who may have contracts to build homes. Guttman said his office has a list of which banks own which lots.
Christopher Spendley, chief financial officer for Washington Homes, said that his company -- despite not acquiring all the assets -- remains in negotiation with several of banks.
"There is a portion of that transaction that is still being worked on," Spendley said.
"I'm not sure that every bank is going to deal with Washington Homes," Guttman said. "They are free to do whatever they want."
Provident issued a statement saying the court order "allows us to take control of our collateral. We are talking to various third parties about the disposition of that collateral."
Regency, once the largest private homebuilder in Maryland, filed for bankruptcy in July after an agreement for Atlanta-based Beazer Homes USA to buy the company for $41 million fell through after creditor objections. In a release of creditor schedules Monday, Guttman said the company showed a total of $46.5 million in secured claims, $1.6 million in priority claims (employee payroll and consumer deposits) and another $14.8 million in unsecured claims.
The largest unsecured claim was by Bankers Trust at $7 million, according to Guttman.
Also waiting for a resolution is Thomas P. Raimondi, associate deputy commissioner for the Maryland Insurance Administration.
Raimondi said his office has "a couple of hundred" claims from Regency depositors against a $500,000 surety bond that was taken out by the company last spring.
"We hopefully are going to make distribution once this is all resolved," he said.
Pub Date: 10/21/98