Venerable Irvine developer John Laing Homes, one of the nation's largest, filed for bankruptcy protection Thursday, joining the growing ranks of residential builders laid low by the collapse of the housing market.
WL Homes, which does business as John Laing, listed assets of more than $1 billion and debt of $500 million to $1 billion in Chapter 11 documents filed in U.S. Bankruptcy Court in Delaware.
The collapse in demand for new homes knocked the 161-year-old firm back on its heels, a representative said.
"The company's performance has been significantly affected by the downturn in the residential construction industry starting in 2006," Chief Restructuring Officer Bradley D. Sharp said in court papers. "There has been a sharp fall in both the number of new homes sold in the United States, as well as the prices of new homes sold."
"It's really unfortunate that these economic events we are all facing has caused this to occur," said James Maginn, chief executive of developer Watt Cos. and a former member of John Laing's board of directors. (A division of Watt Cos., Watt Residential Partners of Encino, merged with John Laing in 1998.)
John Laing had revenue of $948 million on the sale of 1,371 homes in 2007. Revenue dropped to $287 million on the sale of 560 homes through Nov. 30 of last year, according to court documents.
The company is one of the oldest in the business, tracing its origins to 1848 when James Laing, John's father, built a home in the English countryside. John Laing Homes entered the U.S. market in 1984. The company became formally known as WL Homes in 1998 after the merger with Watt Residential Partners.
In 2006, giant United Arab Emirates real estate company Emaar Properties bought John Laing for more than $1 billion. At that time, during the peak of the U.S. real estate boom, John Laing built about 3,000 homes annually, primarily in California, and owned or controlled 15,000 undeveloped lots. It also has divisions in Colorado, Arizona and Texas.
The Chapter 11 filing may be mainly a strategic business move by Emaar, said David Eisner, managing director of real estate advisory group Resolution Economics. Emaar reported a fourth-quarter loss last week based mostly on a $482-million write-down in goodwill at John Laing.
"This is more a matter of the offshore owners wanting to cut their losses and not put good money after bad in a difficult environment for home builders," Eisner said. "The owners are trying to insulate themselves from further losses."
Major John Laing projects include Tustin Field, a 575-home planned community on the former Marine Corps Air Station in Tustin, as well as Forster Ranch, a 1,000-lot community in San Clemente.
Workers have stopped construction on the Madrone, a 180-unit condominium complex over shops at the intersection of Hollywood Boulevard and La Brea Avenue in Hollywood.
John Laing will recover, Watt's Maginn predicted.
"They build a very good house," he said. "We are very confident the company will emerge stronger in the years ahead."
More than two dozen home builders have sought bankruptcy protection since June 2007, including billionaire Carl Icahn's WCI Communities Inc., and Ennis Homes, a Porterville, Calif., home builder founded in 1979, which filed earlier this month.
LandSource Communities Development, the parent company of the developer building the 21,000-home Newhall Ranch community near Santa Clarita, filed for Chapter 11 bankruptcy protection in June.