Excerpt:

SunCal and Lehman File Dueling Chapter 11 Plans

SunCal Cos., a California developer, filed a Chapter 11 plan on Sept. 30 alongside a competing plan by affiliates of Lehman Brothers Holdings Inc., which are part-owners and lenders to the SunCal projects.

A hearing will be held Nov. 5 for approval of disclosure statements explaining the competing plans.

SunCal’s plan would provide for selling the properties. While Lehman would be permitted to bid cash at the sales, Lehman couldn’t bid its secured debt in lieu of cash. SunCal would hold sale proceeds pending the resolution of lawsuits disputing the validity of the Lehman claims. Among other things, SunCal wants the Lehman claims subordinated on account of Lehman’s conduct before and after SunCal’s Chapter 11 filing.

Lehman’s plan would give it ownership of the properties while money would be made available in the nature of a settlement to make some payments to creditors with lower priorities.

Although SunCal filed a disclosure statement, it didn’t technically speaking file the Chapter 11 on account of the so- called automatic stay in Lehman’s Chapter 11 case. SunCal is seeking a modification of the automatic stay in the Lehman Chapter 11 case.

The SunCal cases with the competing plans involve about 20 companies. SunCal says that Lehman values the properties at $461 million while SunCal says the value is $246 million. Lehman’s disputed claim is $1.94 billion, SunCal says.

The SunCal Chapter 11 filings occurred in November 2008 after Lehman’s insolvency shut off funding for the projects. SunCal was California’s largest developer of master planned communities, with 250,000 residential lots and 10 million square feet of commercial space in 50 projects. Not all SunCal projects are involved in the cases involving the dueling plans.

The case in which the papers are filed is In re Palmdale Hills Properties LLC, 08-17206, U.S. Bankruptcy Court, Central District of California (Santa Ana).