Fulton Homes still has no debt plan

Two years and three months after filing for bankruptcy protection, Tempe-based Fulton Homes Corp. still does not have a court-approved Chapter 11 reorganization plan. According to U.S. Bankruptcy Court documents, negotiations between the homebuilder and its creditors, led by Bank of America, appear hopelessly deadlocked. A hearing scheduled for 11 a.m. today will help determine what happens next. The options include continuing to work on a mutual settlement, which Fulton Homes favors, or bringing in a mediator, which the bank-led group favors. Like many builders, Fulton Homes was struggling in late 2008 to keep up with its debt payments as its lenders demanded additional cash to offset the declining value of real-estate assets, market analysts say. The company filed for reorganization in January 2009 and has since been engaged in an epic battle with its lenders. Fulton Homes and its creditors have submitted substantially different debt-repayment plans to allow the company to emerge from bankruptcy. The lenders' proposed plan would force a much more rapid repayment of the company's debt, with higher interest and less consideration for a $25 million debt owed to Fulton Homes Chairman Ira Fulton. Fulton Homes was founded in the mid-1970s by Fulton, a prominent community figure and philanthropist.

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