Debt Mediation Ordered in Fulton Homes Case
Debt mediation has been ordered in the case of Fulton Homes Corporation. More than two years ago, the company filed for Chapter 11 bankruptcy protection, requesting it be allowed to reorganize debts and assets. Now, the bankruptcy judge has determined that the corporation and its creditors should begin mediation proceedings in the Appellate Court for the 9th US Circuit.
At issue is more than $160 million in debt, most of it owed to banks including the Bank of America. Fulton Homes and the banks have not been able to agree on the exact amount of debt incurred on the homebuilder's unsecured line of credit. Fulton had taken out the loan in order to position itself for a housing boom in Phoenix, Arizona. Most of the funds were used to purchase land and construct spec houses.
Debt Mediation to Consider Market Conditions
Fulton Homes did not miss any of its loan repayment obligations, but went into default anyway because of the real estate downturn in 2008. It is common in commercial real estate financing for loans to require that debt-to-value ratios be maintained.
Mediation attorneys with at least eight years of experience will review all information pertinent to the case before contacting representatives of each side. The 9th Circuit Court of Appeals will select a mediation attorney randomly from its roster.
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