Bankrupt Levitt and Sons’ Major Creditors Get Properties Back

Bankruptcy Judge allows Bank of America and Key Bank to take back properties used to secure loans.

November 29, 2007 – Palm Coast, FL – From post WWII Levittown in Long Island, NY to Chapter 11 in FL on November 9th, some 60 years later, Levitt and Sons built over 200,000 homes. All projects were halted in October. Moving proceedings forward, the bankruptcy judge gave permission for Levitt and Sons to abandon more than 1000 unfinished lots in The Seasons at Tradition, an upscale “active-adult” community they were developing in southeast Florida. Levitt and Sons will also be allowed to abandon over 3000 lots across the rest of Florida, some in Flagler County. The move allows two of Levitt and Sons largest creditors, Bank of America and Key Bank, to foreclose on the properties.

Levitt filed to abandon about 2,800 unsold lots in St. John’s and Manatee counties as well as in South Carolina and Georgia that are secured by loans from Wachovia Bank. If the two parties are unable to reach a new financing agreement by a scheduled December 19 hearing, Levitt will seek court permission to abandon the lots.

Levitt and Sons owes Key Bank $96.5 million and Bank of America $103.9 million. Other major creditors include Wachovia Bank ($112.5 million), Regions Bank ($24.7 million) and AmTrust.

In The Seasons at Tradition, those who already own homes are faced with unmanned security gates and unbuilt amenities. Those with unfinished homes face the reality that their contract deposits are in jeopardy. Several contractors were also left hanging. The Seasons is one of eight communities within the 8,200 acre Tradition development.

On a positive note, Levitt and Sons parent company, Levitt Corp. has released a statement announcing the establishment of a fund “to provide assistance to employees of Levitt and Sons who were or will be adversely impacted by the Chapter 11 filing. The new fund will pay the separation pay of Levitt and Sons’ former employees that Levitt and Sons is unable to pay due to limitations mandated by the U.S. Bankruptcy Code. These funds will track the Levitt and Sons pre-bankruptcy separation policies and practices, including pre-bankruptcy medical benefit claims under the Levitt and Sons’ health plan.”