Troubled luxury public builder WCI Communities filed for Chapter 11 bankruptcy today, citing its inability to restructure its debt. “The company, with all diligence, has attempted to avoid a bankruptcy filing. However, the filing became necessary because of the recent failed effort to obtain financing and the recognition that the company’s entire $1.8 billion of debt may soon be in default,” said investor Carl Icahn, who is also chairman of WCI’s board of directors. “This was confirmed when certain holders of the company’s $125 million convertible notes informed the company that they rejected its exchange offer and instead insisted on being paid in cash in full on August 5, 2008.”
The reorganization has already resulted in the exit of one top executive: CEO Jerry Starkey, whose departure from the company is effective immediately. His interim replacement is David L. Fry, who has been WCI’s chief operating officer since late 2007. “Day-to-day operations will continue as usual, while we work with our stakeholders to restructure the balance sheet,” Fry said. “We will continue to sell, build, and deliver homes without interruption. Construction and sales activities will continue; employees will come to work and be paid.”
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