Icahn’s WCI Communities Files for Bankruptcy After Failing to Secure Financing

Carl Icahn's WCI Communities became the latest casualty of the housing market crisis recently, filing for Chapter 11 bankruptcy protection after the home builder failed to get additional financing in the face of massive losses. Icahn, WCI's board chairman, said the filing was necessary because the Bonita Springs, FL-based developer's entire $1.8 billion debt may soon be in default. Icahn said this was confirmed when some holders of $125 million convertible notes insisted on being paid in cash in full recently. WCI also dismissed the CEO and replaced him on an interim basis with another, who said they need to restructure their debt and bring their capital structure in line with today's marketplace realities. He said they believe Chapter 11 provides the most efficient and timely process for accomplishing this. Day-to-day operations, including selling, building and delivering homes, will continue, and employees will still come to work be paid, WCI said. WCI and about 130 of its subsidiaries filed petitions to restructure their debt and capital. Companies that file for protection under Chapter 11 of the U.S. Bankruptcy Code seek a court order to prevent creditors from immediately seizing the company's assets. WCI Communities builds retirement homes and "lifestyle communities" in FL, mostly for retirees and wealthy vacationers from the NY and the Washington, DC areas.