4. Reason for Transfer of Indirect Control
This request for a change in indirect control of Valencia is the result of Newhall Development and 20 of its affiliated entities, including LandSource Holding and Newhall Land and Farming, June 8, 2008 filing for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. The Chapter 11 filing indirectly impacted Valencia because Newhall Development wholly owns LandSource Holding, which, directly or indirectly, wholly owns Newhall Land and Farming, which in turn, wholly owns Valencia.
Contributing factors to that Chapter 11 filing were the sudden collapse of California's real estate markets in 2007 and 2008, substantial decline in the value of the debtors' assets as a result of that collapse, and claims from more than 100 creditors.9
After negotiations among debtors, creditors and potential new investors the Plan was finalized and presented to the Bankruptcy Court for approval. Applicants stated that many of the myriad terms of the Plan were not finalized until just days before the Bankruptcy Court held a hearing on an Implementation Motion and approved the Plan on July 24, 2009 which became effective on July 31, 2009. A copy of the Plan is attached to the Application as Appendix 1.
9 Application at 7.
