WCI declares Chapter 11 bankruptcy

Bonita Springs, Fla.-based WCI Communities, a national home builder with operations in seven states, has announced 130 of its wholly-owned subsidiaries have filed for Chapter 11 bankruptcy protection. The Chapter 11 petitions were filed in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

The company noted that excluded from the filing are the company’s Watermark real estate brokerage, which does business as Prudential Florida WCI Realty; and its WCI Mortgage business and “certain other joint ventures in which WCI is a partner.”

Investor Carl Icahn, chairman of WCI’s board of directors, said the company tried to avoid a bankruptcy filing, but the company capitulated after a “recent failed effort to obtain financing and the recognition that the company’s entire $1.8 billion of debt may soon be in default.” Additionally, the company missed an Aug. 5 deadline for restructuring $125 million in convertible bonds.

The company also announced that Jerry Starkey would step down from the company as CEO, due to a need for “new leadership at the CEO level,” according to a statement from the company.

The home builder appointed David Fry as interim president and CEO, pending the selection of a permanent CEO.

The company’s stock had fallen to $.66 per share on Tuesday, a huge drop from an original offer Icahn made for the company last year of $22 for share. He purchased a stake in the company at a cost of $19 per share in 2007. Icahn was named chairman of the company after a long proxy battle, during which WCI Communities took itself off the market and rejected Icahn’s takeover bid.

WCI Communities builds homes in Florida, New York, New Jersey, Connecticut, Massachusetts, Virginia and Maryland.