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HomeMy WebLinkAboutNewspaper ArticlesGDS Is Back On Its Feet 0.�T �. MIAMI (AP) — A judge Friday cleared the way for General De- velopment Corp. to emerge from bankruptcy under alne name next week after giving final approval to the developer's reor- ganization plan. Judge A. Jay Cristol, who had h accepted te plan in December, signed a confirmation order to end the case that began after the company was charged with fleec- ing thousands of home buyers. The new company, Atlantic Gulf Communities Corp., officially begins business Tuesday. "As of the 31st, the bankruptcy will be'lfory Gen- eral Fritts, a eral Development. The new scaled-down company will issue new notes and creditors. Banks stock pay off can expect 78 cents on the dollar, homeowners 27.8 cents, bondhold- ers as little as 2.4 cents and for- mer stockholders nothing. "It's been a difficult two years," Fritts said. "This was one of the largest and most complex bankruptcies in U.S. history•w General Develop h Florida cohich built nine sprawling munities now home to 220,000 Pell ple, filed for Chapter bankruptcy protection in April 1990, only days after it was in dicted on charges of selling more than 10,000 homes at inflated prices. Two of the GDC communities are in Indian River County — Vero Highlands and Sebastian Highlands. business The Miami company's sales empire had been fed by that stretched to Europe and is and relied on rigged appraisals and deceptive tactics to sell prop- erty in its Florida communities, court records riho leaded guilty to The company pleaded its fraud conspiracy, management and agreed to re- imburse fleeced home buyers. Four former executives are on trial in criminal court. plan, As part of the bankruptcy p the company had to shrink from just under $5 billion in debts claimed by creditors to $1.5 billion through the elimination of dupli- cate and overstated claims. "The new board of directors and management are eager to imple- ment the new company's business plan and begin working for our new stockholders, who are the for- mer creditors," Fritts said. Patin Bay gains GDC acreage By Scott Rowe / FLORIDA TODAY -` Bankruptcy attorney Robert Roth termed it Palm Bay's ultimate divorce from General Development Corp. The last act of a long-running drama was played out Thursday night as the Palm Bay City Council agreed to accept 800 acres of land worth $11.7 million in exchange for quitting the city's legal claim against GDC. Roth, a Miami attorney representing the city, said the settlement was completed just prior to the March 30 negotiation deadline, and the properties obtained should allow for growth and revenue profits. More than 100 land parcels will be acquired throughout the city's 65 square miles, and a $700,000 cash sum has been included to allow the city's payment of back taxes and incumberances, he said. Various players in the city's engineering and planning divisions spent seven months developing the settlement. It gets the city what council member Emmee Harmon proclaimed the best deal obtained by any Florida municipality in their dealings with the development giant, which is in Chapter 11 bankruptcy reorganization. In exchange for the acquisitions, the city agrees to accept responsibility for an additional 550 miles of roads and their related drainage considerations. The increase is expected to be a formidable burden on the Public Works Division, and the return on many of the properties offered for sale might go toward that department's expansion, Acting City Manager Michael Abels said. The agreed-upon properties represent a return of about 20 cents on the dollar when compared with the city's $55 million claim against GDC for roads and drainage projects, a figure Abels finds acceptable. "You never get a dollar for dollar return in any bankruptcy proceeding, and many of the other communities negotiating with GDC have come away with 4 or 5 cents on the dollar, so I think we did very well for ourselves," Abels said. "There is very little residential property included in the settlement, as we were mostly focusing on land with potential commercial and industrial value." The largest and most attractive property includ- ed in the deal is 250 of the 2,000 prime acres located in the city's southwest quadrant. It often is referred to as the Hole in the Doughnut. The pristine land had been designated as the hub of the Port Malabar planned community. Future use considerations include residential housing and the possible devel- opment of a golf course, said Chris Norton, city director of planning and development.