Fulton Homes settles with creditors in bankruptcy plan

Fulton Homes has settled with its creditors in a long, contentious Chapter 11 bankruptcy action. U.S. Bankruptcy Court Judge George Nielsen Jr. approved the fourth amended plan put forth by Tempe-based Fulton, which provides for all of its 85 creditors to be paid in full over four years. The majority of the debt, about $163 million, is owed to four banks: Bank of America, JPMorgan Chase, Compass Bank and Wells Fargo. An additional $2.2 million will be paid to other creditors, including subcontractors and governments that are owed taxes. The plan will become effective by July 31, said Steve Walters, CFO of Fulton Homes Corp. At that time, Fulton will pay a lump sum of $57.5 million to the banks, as well as professional and attorney fees. “It’s a full-paid plan over a four-year period, and it’s not going to require any additional outside financing,” said Doug Fulton, CEO and president of Fulton Homes. In addition, $25 million owed to Ira Fulton -- the company’s founder and Doug Fulton’s father -- has been converted into stock. “It’s a concession that (Ira Fulton) was willing to make to show his faith in the company,” Walters said. The banks objected to previous plans submitted by Fulton, but agree with the final proposal’s terms. “I think the banks are satisfied with the resolution,” said attorney Don Gaffney, a partner in Snell & Wilmer LLP, who represented the consortium of banks. “It was a very complex case with a lot of moving pieces.” Gaffney does not anticipate any problems in the interim before the plan becomes effective.

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