Labor complaint filed against Fulton Homes

In a rare move, the agency that oversees and licenses contractors filed a complaint against Tempe-based Fulton Homes related to unlicensed labor on its property.

The complaint, filed Oct. 25, potentially signals a shift in state regulators’ efforts to enforce unlicensed labor laws by targeting a prominent company at the top of the construction food chain.

Read more...Labor complaint filed against Fulton Homes

Fulton, 80, still building his legacy

 
The housing market may be sluggish, but homebuilding mogul, philanthropist and Arizona original Ira Fulton is still moving full steam ahead. At 80, the founder and chairman of Tempe-based Fulton Homes is lively, outspoken, determined and busy. He still goes to the office daily and puts in long hours.

Despite being forced into bankruptcy in 2009, Fulton Homes is one of the Valley's top homebuilders. Last year, it out-sold every local competitor in terms of sales per subdivision.

Fulton also is involved in his Fulton Family Foundation, which has made him well-known as a philanthropist and a champion of higher education. The foundation has contributed millions to Arizona State University, Utah's Brigham Young University and several other non-profits.

Fulton recently donated $2.5 million to Barrow Neurological Institute at St. Joseph's Hospital and Medical Center in Phoenix to create the Gregory W. Fulton ALS and Neuromuscular Disorders Center. Greg Fulton, Ira's son, was diagnosed with amyotrophic lateral sclerosis, also known as Lou Gehrig's disease, in 2008 and had been a patient at Barrow until his death in November. He was 53.

Ira Fulton sat down with The Republic to offer his views on business, philanthropy, family, faith and legacy.

Q: How actively involved are you in the day-to-day operations of Fulton Homes?

A: Very active. I love it. My wife, the other day, said she's really happy that I'm down to 12 or 14 hours a day.

I have a son who is the chief executive officer. I have a son-in-law who is the chief operating officer. I have a son who is the executive vice president. But if they don't work, they get their butts kicked. Don't let the door hit you on the way out. They're good kids, but this is my wife's and my company, and I want them to earn it. And if they don't earn it, they don't work for Uncle Ira.

Doug Fulton is the chief executive officer. He runs the day-to-day operations. Norm Nicholls does the land buying. One is marketing and one is construction, and it works out very well. And if they don't agree, then I step in.

Q: When and how did philanthropy and charitable giving become such an important part of your life?

A: With my mother. When I was a boy, we had a little hamburger stand in Tempe. I was the dishwasher. I was the youngest. And my mother would not turn away anyone who was hungry. I would say, "We can't afford to do this." But she would say, "Son, they're hungry." And I shut up because she's my mom. I learned the principles of giving, and I didn't even know it. My mother was a very generous lady.

Q: What is the state of philanthropy in the U.S.? Are successful companies and individuals giving away as much as they should?

A: No. I'm on their fanny all the time. I'll tell couples, "When was the last time you saw a Brinks truck at a funeral procession?" I tell them how I said to my mother, before she died, that I figured I'd take it with me. She said, "How?" I said, "Traveler's checks," and she hit me.

I have a real hard time trying to explain to people that you don't just leave it to your kids. Give them a good education if they earn it and deserve it. But don't just give it to them -- you might as well just throw it away. Do something with it. Help them be successful. If they want to go into business, help them be successful. If they want a good education, help them be successful in the areas they want to pursue.

Q: What is the role of family in your life?

A: Family is your cornerstone. Without a family, you really don't get the proper guidance that you need growing up. Did I get my fanny kicked a lot for talking back? Yes. I had strong people helping me achieve where I am today. I didn't make my first million dollars until I was 44. And since then, I've made over a billion dollars. Do you know why? I stopped chasing the dollar, and I learned to use my talents better.

Q: How has your faith influenced you in your personal and professional life?

A: A lot. Because I was raised that there was good and bad, good and evil. When you think evil is good and good is evil, you're in trouble. Why I didn't screw up more is beyond me. My mother always made me go to church on Sunday. I couldn't go out and play. I had to stay in the house. And if they caught me up playing and I didn't go to church, then I didn't get to eat one meal. So they had strict rules. They didn't want me beating the system. I always tried, and I always got caught. And I always paid the consequence.

My church is very, very important to me. I don't care if you're Catholic or Baptist or Jewish. If you live your religion and really abide by what they teach you, you will have a good foundation in life. It just happens to be that I am a Latter-day Saints (member). That's the religion I believe is right. But I sit on this Catholic board -- the only Mormon on it -- and sitting over on that Catholic board I feel comfortable. They're good people. They're God-fearing.

Q: What would you like your legacy to be?

A: The greatest legacy I can leave behind is my students, to help them get an education. There is no greater achievement. I probably, between all my colleges, have fixed 7,000 or 8,000 either with books, dinners, travel or different types of scholarships. ... I have a foundation named after my family, and at the ASU College of Engineering, we have the Fulton Center. Up at BYU, we have $4 or $5 million in scholarships. We want to help people to achieve their dream. If you can dream it, you can create it. You can formulate it and make it happen.

by J. Craig Anderson - Mar. 3, 2012 04:22 PM The Republic|azcentral.com

Fulton, 80, still building his legacy

Trade-in program ads get scrutiny - USATODAY.com

A Queen Creek couple looking to get out of an upside-down mortgage and into a brand-new home thought that a "trade-in" program promoted by Fulton Homes could be the answer.

On billboards, radio and Internet advertisements, Fulton Homes offers prospective customers a chance to trade existing homes for new ones.

"Why stay in an old home when you can trade up to an energy efficient Fulton Home?" the company's website asks in a prominently displayed promotion.

But after making inquiries and listening to pitches, Stanell and Jonathan Fylling said the trade-in program appeared to be more of a marketing gimmick that seemed to offer little help to homeowners.

Instead of trading their home for a new one, the Fyllings said they would have been left holding two mortgages for a couple of years and then faced with the possibility of letting their old house go into foreclosure.

"I don't see how they can get away with saying it is a trade-in program," Stanell Fylling said.

Executives with Tempe-based Fulton Homes defend the program, saying it has helped dozens of homeowners get out of old homes and into new ones.

"We've never tried to mislead anybody," said Dennis Webb, Fulton vice president of operations. "What we are trying to do is just make friends."

Many of the Phoenix area's biggest homebuilders participate in the program, which targets potential customers' inability to sell their homes, often because they owe much more on their mortgages than their homes are worth. They can get help with leasing or selling their existing homes and are offered reduced management fees or real-estate commissions. But reporters for The Arizona Republic and 12 News' "Call 12 for Action" found that few builders have created marketing campaigns around it because of concerns that consumers might get the wrong impression.

"We don't market it heavily for the very reason that Fulton is getting pushback," said Pierrette Tierney, vice president of sales and marketing for Taylor Morrison Homes. "For us, it is more of an extra tool in our belt."

Tierney said her company's sales staff has been trained on the program. She said they advise customers on an individual basis "as opposed to putting it up on a billboard."

Locally and nationally, the housing market has cratered in the past few years, leaving homebuilders searching for innovative ways to find buyers. Homebuilders went from selling 60,000 homes a year in the Greater Phoenix market five years ago to about 7,200 this year.

Despite a Chapter 11 bankruptcy reorganization, Fulton Homes has been one of the most successful homebuilders in metro Phoenix in 2011, averaging 4.8 sales per subdivision per month, compared with the local industry average of about 1.5 sales.

Webb said that through the trade-in program, Fulton has bought homes outright from customers, leased out their existing homes for up to three years with no management fees and offered steep discounts on real-estate agent commissions.

Fulton Homes representative John Mecham of Knoodle Public Relations said the program works in similar fashion to trading in a used car.

But unlike with used-car trade-ins, where customers often owe more on their cars than they are worth, old-home mortgages cannot be rolled into new-home loans.

"You can't roll a deficit loan amount into a new home loan. Real-estate laws prohibit that," Webb said, adding that underwriters typically can't approve mortgage loans that are greater than the home's appraisal value.

Old for new?

A used-car trade-in was the scenario that the Fyllings said they envisioned when they heard Fulton's radio ads about the trade-in program. They said they grew hopeful about getting out of their 2,200-square-foot home and moving to a larger Fulton home in Gilbert.

Stanell, 28, a hairstylist, and Jonathan, a pipe fitter, said they owe about $33,000 more than their home's current value.

Stanell said she went on Fulton's website, began looking at different communities and floor plans and then called. She said a Fulton representative immediately transferred her to an independent real-estate agent who provided very little information on the trade-in program.

Stanell said she was questioned about her home's value, condition, size and mortgage. Before talking about trades, the agent insisted on sending someone to their home.

About five minutes after the agent arrived, Stanell said, she began thinking that she had been misled about the trade-in program. Her first surprise was that the agent wasn't exclusively representing Fulton Homes and showed her listings for homes both old and new in communities throughout the Valley. Then came the options.

According to Stanell, the agent suggested leasing their existing house. He said the company could guarantee a lease for up to five years with a reduced management fee.

Stanell acknowledged that leasing might allow them to qualify for a second mortgage, but then she and her husband would have two homes to worry about. And what happens when the lease ends, she asked: A short sale? Foreclosure?

Stanell said she felt as if neither Fulton Homes nor the agent seemed concerned so long as they sold a home. She said the agent offered nothing that she couldn't do on her own. After a back-and-forth exchange, Stanell said, the agent acknowledged that the trade-in program was "a marketing tool."

Fulton Homes officials deny the program is any kind of marketing ploy. The agent, who works with Keller Williams and Rider Elite, denied to Fulton that he made such a claim to the Fyllings.

On its website, Rider Elite promotes the trade-in program and lists 19 builders that participate. The website offers answers to questions about foreclosures, short sales and negative equity.

"We can help you trade-in your home," an advertisement on the site states.

Brent Anderson, vice president of investor relations at Meritage Homes Corp., said his company has never marketed the program.

"We don't call it, in any of our communities that use it … a trade-in program," he said. "That could be misleading."

Anderson said the program offers little that a traditional real-estate agent doesn't offer, although Meritage has referred customers to it on certain occasions.

"It is more of a listing service," he said of the program. "That is the way it is referred to."

A common approach

Although Fulton just recently built a marketing campaign around the trade-in program, Webb said the trade-in program has existed for several years. Webb said the involvement of other builders gives customers flexibility, so they aren't locked into a single builder's offerings.

Chandler homeowner Jason Crespo said he is a satisfied customer of the Fulton Homes trade-in program.

Crespo, 43, an insurance agent, said he and his wife used the program to move out of their home in Chandler Heights and help his mother sell her home in Sun Lakes. He said that they all were able to move into a 4,167-square-foot Fulton Home that is bigger than their two older homes combined.

"It was our dream to build our new house, the way we wanted," he said. "But I never thought I was going to hand them the keys to my old house and they were going to hand me the keys to a new one."

Crespo said his mother, who owed nothing on her home, was able to sell it outright using an agent who worked on a reduced commission. For his home, Fulton agreed to a guaranteed two-year lease with no management fee.

Crespo described himself as a cautious consumer who looked carefully at the possibilities before agreeing to become involved. He said that he never expected the program to work like buying a new car.

"I think (Fulton) tries to help you buy a house," he said. "I do feel like we get a good deal. There were many advantages that I saw."

But Crespo also acknowledged that his deal doesn't fit the typical definition of trade.

"Did I do anything to trade? Probably not," he said. "Would I have bought a home from Fulton if they didn't have (the trade-in) program? Probably."

By Robert Anglen, The Arizona RepublicPosted 12/20/2011 04:11:14 AM


Trade-in program ads get scrutiny - USATODAY.com

Fulton Homes to open 3 new subdivisions | Central Ohio New Home Builders

In the current housing-market slump, it is practically unthinkable for a Phoenix-area homebuilder to open three new subdivisions in three consecutive months, but that is exactly what Tempe-based Fulton Homes plans to do.

Fulton Homes Vice President of Operations Dennis Webb said the company will open three new subdivisions in Queen Creek and Chandler – one each month in October, November and December.

Webb said Fulton Homes decided to launch the new communities in rapid succession because the company is getting close to selling out of its popular Fulton Ranch master-planned community near Arizona Avenue and Ocotillo Road in Chandler, and because it happened to have three attractive properties available for development at the right price.

Two of the three subdivisions were planned by other homebuilders that were unable to continue the projects or lost the properties to foreclosure.

• Mendocino at Ashcreek is a 70-lot subdivision near Rittenhouse and Ocotillo roads in Queen Creek that was initially developed by a custom-home builder that ceased operations there after building just eight homes, Webb said. Fulton Homes plans to open in October, offering 3,000- to 4,000-square-foot homes on half-acre lots starting at about $310,000.

• Shoreline at Fulton Ranch will be the final Fulton Homes subdivision inside the massive, Chandler master-planned community, which is nearly sold out, Webb said. The 129-lot community is set to open in November and will feature homes between 2,500 and 3,800 square feet. The starting price has not been set.

• Monterey Bay at Victoria Estates is a 45-lot community near Hawes and Ocotillo roads in Queen Creek that was designed by another homebuilder, but no homes ever were built. It features half-acre lots and is scheduled to open in December. Homes will range between 3,000 and 4,000 square feet, Webb said.

by J. Craig Anderson The Arizona Republic Sept 26, 2011




Fulton Homes to open 3 new subdivisions | Central Ohio New Home Builders

Despite bad economy, homebuilder has Valley's top-selling subdivision

Fulton Homes had the top-selling subdivision, based on permits, in metro Phoenix through May of this year, but overall sales remain low in a weak economy.

The Tempe-based homebuilder's new Monterey Bay at Fulton Ranch community in Chandler had the fastest sales pace from January to May, according to RL Brown Reports.

Since debuting on the market in January and priced at about $380,000, 62 of the community's 89 homes have sold, said Dennis Webb, Fulton Homes vice president for operations, adding that Fulton execs are considering building a similar community in Queen Creek.

Having the top-selling subdivision is another bit of good news for the company, which faced $160 million in debt when it filed for bankruptcy in January 2009. On Tuesday, it reached a settlement with lenders and saw its reorganization plan approved in court.

The Brown report tracked building permits issued by the city, which RL Brown President Greg Burger said is an indicator of sales. He said most builders do not seek permits unless they have an interested buyer.

Total new-home closings for this year are predicted to be about 5,750 for metro Phoenix - about a 10th of the new homes closed in 2005, when the market peaked with nearly 57,500, according to RL Brown.

Fulton might be No. 1, but the housing market as a whole hasn't shown much growth, said Burger, a real-estate analyst.

"The housing market, as it sits right now, is basically a flat performance," Burger said.

Webb said public perception of the company has probably been affected by the bankruptcy.

The other top-selling subdivisions also were in the East Valley. Blandford Homes' Power Ranch Craftsman Collection in Gilbert came in second with 58 new homes closed, and K Hovnanian Homes' Willows, also in Gilbert, closed 49 homes.

Blandford Homes sales associate Gale Richardson attributes the success to Craftsman Collection's $129,000 starting price, low interest rates and "short-sale orphans" - people eager to buy a home but tired of waiting for banks to approve their loans.

"They get sick of the waiting process. The short-sale process can be a nightmare," Richardson said. "That's frustrating for people, which has driven them into the new-home arena."

Webb said the Monterey Bay success can be linked to the one-story homes' amenities, furnishings and energy efficiency.

"When the housing boom took a reset, builders cut prices, but they didn't give homebuyers enough amenities to give them a reason to buy. . . . The Valley as a whole is not doing well," he said. "(But) we're doing pretty well."

He said luxuries like granite counter tops, courtyards and energy efficiency have become the norm. Monterey Bay is one of four projects at Fulton Ranch, which has a church, school and grocery store.

Also nearby is Intel Corp., whose employees have proved a strong demographic for the community.

Webb said half of the community's residents work at the Intel Fab 32 factory, also in Chandler.

by Kevin Cirilli The Arizona Republic Jun. 29, 2011 12:00 AM



Despite bad economy, homebuilder has Valley's top-selling subdivision

Fulton Homes to exit Chapter 11

After a contentious and drawn-out bankruptcy proceeding, Tempe-based Fulton Homes has reached a settlement with its lenders that will allow it to emerge, after 28 months, from Chapter 11 protection.

A group of lenders led by Bank of America has agreed to withdraw a competing reorganization plan in exchange for company founder Ira Fulton forgiving $25 million in personal loans he made to the company.

The settlement Tuesday in Phoenix paved the way for the approval of Fulton's reorganization plan by U.S. Bankruptcy Judge George Nielsen and the company's return to normal operations.

Under terms of the reorganization, the lender group will receive an up-front cash payment of $57.5 million and will receive the balance of the total $163 million owed in installments over the next four years. An additional $2.2 million in miscellaneous debts will be paid when the plan becomes effective.

Fulton Chief Financial Officer Steve Walters said the company will emerge from Chapter 11 "completely solvent" and able to meet its operating expenses without relying on outside financing.

Fulton Homes will continue under principal ownership of the Fulton family, and its current management will remain in place.

The Phoenix-area homebuilder sought Chapter 11 protection early in 2009 after the recession put an end to the Arizona housing boom and sent real-estate values plummeting.

At the time, Fulton, with 21 active subdivisions in metro Phoenix, was one of Arizona's largest homebuilders.

Friction quickly surfaced between the company and its lenders, which at the time included BofA, JPMorgan Chase Bank, Compass Bank, Guaranty Bank and Wachovia Bank.

The banks initially wanted the 37-year-old company liquidated and sparred over its continued philanthropic endeavors.

Founder Ira Fulton and his wife, Mary Lou, are two of the state's most generous benefactors, pledging almost $160 million to Arizona State University alone.

The banks also objected to Fulton's insistence on being repaid approximately $25 million he claimed to have advanced the company in hard times. Under the reorganization, the debt will be converted into equity in the company.

The banks eventually filed a Chapter 11 reorganization plan and sought to wrestle control of the company from the Fulton family.

In April, the company and its lenders were ordered into mediation, which ultimately led to the settlement.

Walters said the company now is building in nine subdivisions in the southeast Valley and plans to open five more within the next nine months. It expects to sell about 300 homes this year and fully is on the road to recovery, Walters added.

Douglas Fulton, Ira's son and CEO, added that the company intends to continue to support philanthropic causes when it emerges from Chapter 11.

"We will continue our public-service campaigns," he said, "making the Valley a safer place for families and helping better the area's education system."

by Max Jarman The Arizona Republic-Jun. 29, 2011 12:00 AM




Fulton Homes to exit Chapter 11

Fulton Homes mediation ordered

Almost 28 months after Fulton Homes Corp. filed for Chapter 11 reorganization, a bankruptcy judge has ordered the Tempe-based company and its creditors to undergo mediation through the 9th U.S. Circuit Court of Appeals.

Fulton Homes and its primary creditors, a group of banks led by Bank of America, have been arguing for more than two years in U.S. Bankruptcy Court over the terms under which the builder would repay the balance of its debt of more than $160 million on an unsecured line of credit.

Fulton Homes and its creditors have not been able to resolve a disagreement on the amount of debt owed.

Fulton's debt stems from a loan issued by the lenders during the Phoenix area's housing boom for land purchases and speculative housing construction.

As with all commercial real-estate loans, there were a number of conditions that had to be met to prevent the loan from going into default, including a certain ratio between the loan balance and the value of Fulton Homes' real-estate assets.

When real estate values plummeted in 2008, it quickly put Fulton Homes into default, court records show, even though the company had not missed any of its loan payments. Fulton Homes opted to file for bankruptcy protection in January 2009.

The mediation will give the parties another chance to resolve their differences. The participants will present their recommendations to a neutral mediator, who will work with both sides to set terms for the repayment of debts, according to Phoenix attorney Don Gaffney, who represents the lender group.

According to the 9th Circuit's website, all its mediators are experienced attorneys with eight to 20 years of experience settling disputes. A mediator selected randomly by the court will review the Bankruptcy Court record of the case and then conduct phone conferences with attorneys on both sides.

As of Wednesday afternoon, no dates had been set for the conferences.

The appellate court's website explains that mediators generally set their schedules based on the size and complexity of the case involved.

A total of 843 documents were filed by attorneys and the court in the Fulton Homes bankruptcy case, according to the court record.

by J. Craig Anderson The Arizona Republic Apr. 28, 2011 12:00 AM



Fulton Homes mediation ordered

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.

The engineering college at Arizona State University bears Fulton's name, and ASU's Mary Lou Fulton Teachers College was named after his wife.

Doug Fulton, Ira's son, is president and chief executive of Fulton Homes.

by J. Craig Anderson The Arizona Republic Apr. 25, 2011 12:00 AM



Fulton Homes still has no debt plan

Fulton Homes' reorganization plans duel

Creditors in Fulton Homes' Chapter 11 bankruptcy case will be presented with at least two competing reorganization plans on which to cast their votes.

After a grueling, 20-month effort to negotiate mutually agreeable terms, the Tempe-based homebuilder and a group of lenders, led by Bank of America, have submitted substantially different debt-repayment plans for the company's creditors to consider.

The lender group's submission of a competing plan shifts the dynamic of the proceedings from a negotiation effort to a battle for the votes of dozens of Fulton Homes creditors.

The banks' 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 founder Ira Fulton.

Neither plan would require liquidation of the company, as Fulton Homes executives had feared, nor would it threaten their jobs.

"It leaves all existing management and employees in their current positions," Bank of America spokeswoman Shirley Norton said.

Nor would either plan have a negative effect on holders of Fulton Homes home warranties, as they are managed by a separate entity not included in the bankruptcy.

A unanimous vote for either plan seems unlikely, since eligible voters include members of the lender group - comprised of BofA, JPMorgan Chase Bank, Compass Bank and Wells Fargo - as well as company founder Fulton.

The fundamental difference between the bank group's plan, filed Tuesday in U.S. Bankruptcy Court, and the Fulton Homes plan, filed Sept. 15, is the repayment deadline.

Under the lenders' plan, the builder would have three years to repay its current debt, estimated at $184 million to $194 million, plus whatever interest accrued during the repayment period.

The Fulton Homes plan would give the company six years to repay its debt.

Another key difference is the amount of a lump-sum payment to be made to creditors immediately upon court approval of the prevailing plan.

The lenders propose an advance payment of $50 million, while the builder's plan would require $30 million to $35 million in advance.

According to court documents, Fulton Homes currently has cash reserves of about $80 million.

Another major difference is in the interest rate that would accrue during the repayment period. The rate proposed by Fulton Homes would top out at slightly above 7 percent, based on the current prime interest rate, while the lender-proposed interest rate would go as high as 9 percent.

Vendors to the builder with outstanding accounts receivable also would be treated differently, depending on which plan prevails.

The lenders' plan would have them paid in full immediately, while the Fulton Homes proposal would pay them 60 percent immediately and the remainder in installments over a two-year period.

Ira Fulton, who's a noted philanthropist, would be affected by the vote's outcome.

An unsecured, $25 million debt owed to Fulton by his company could not be repaid until after all other creditors had been paid in full, under the lender plan.

The homebuilder's plan immediately would exchange founder Fulton's debt for additional private shares in the company, subject to the court's approval.

The Chapter 11 case, which Fulton Homes filed in January 2009, passed the 20-month mark on Monday, which by law opens up the proceeding to alternate repayment proposals from any interested party. Before Monday, only the debtor, Fulton Homes, was allowed to submit a plan.

Another local company, Chandler-based grocery chain Bashas' Inc., recently emerged from its Chapter 11 proceeding after a 13-month effort.

Fulton Homes' creditors are seeking payment stemming from a $250 million unsecured line of credit extended during the housing boom.

Lead creditor BofA cut off the credit line in late 2008. The Charlotte, N.C.-based bank contends that Fulton Homes owes the bank group more than $163 million, plus interest and legal fees.

Earlier this month, Judge George B. Nielsen Jr. approved the Fulton Homes vote deadline and a follow-up hearing on Oct. 28.

Regardless of which plan receives the majority of creditors' votes, it still would be subject to the court's evaluation and approval.

If creditors or the court rejected both plans, Nielsen could rule for the liquidation of Fulton Homes - which he already has vowed not to do - or he could throw out the bankruptcy case, leaving the builder and its creditors to fend for themselves in civil court.

by J. Craig Anderson The Arizona Republic Sept. 29, 2010 12:00 AM



Fulton Homes' reorganization plans duel

Fulton Homes, creditors seek settlement

With its time in Chapter 11 bankruptcy approaching the two-year mark, Fulton Homes and its creditors will take one last shot at a settlement in U.S. Bankruptcy Court before the Tempe-based builder's reorganization effort escalates into a legal battle.

The specter of litigation hung over Judge George B. Nielsen Jr.'s Phoenix courtroom Thursday as attorneys for Fulton Homes and lead creditor Bank of America hammered out an Oct. 21 deadline for creditors to vote on the builder's fourth proposed reorganization plan.

BofA attorney Don Gaffney of Phoenix law firm Snell & Wilmer said that despite an honest effort by creditors to conclude the Chapter 11 reorganization agreeably, the coming vote's outcome was impossible to predict.

If the settlement effort fails, the process would shift from uneasy cooperation to all-out conflict, with the court ultimately deciding how or whether Fulton Homes would continue to operate while repaying its massive debts.

Fulton Homes' creditors, who also include JPMorgan Chase Bank, Compass Bank and Wachovia Bank, are seeking payment stemming from a $250 million unsecured line of credit extended during the housing boom.

Lead creditor BofA cut off the credit line in late 2008. The Charlotte, N.C.-based bank contends that Fulton Homes owes the bank group more than $163 million.

Debtor's attorney Sean Cork of Squire, Sanders & Dempsey in Phoenix reiterated concerns that the 20-month reorganization effort's slow pace posed a threat to Fulton Homes' financial recovery.

Another local company, Phoenix-based grocery chain Bashas' Inc., recently emerged from its Chapter 11 proceeding after a 13-month effort.

Nielsen approved the Fulton Homes vote deadline and a follow-up hearing on Oct. 28.

There are three possibilities: Creditors could approve Fulton Homes' reorganization plan as written, propose an amended version or reject the plan outright.

Nielsen asked both attorneys about their readiness to proceed with litigation but urged them not to go there.

"It would be a major disappointment," he said.

by J. Craig Anderson The Arizona Republic Sept. 16, 2010 05:41 PM


Fulton Homes, creditors seek settlement

Judge: No liquidation for Fulton

Judge George B. Nielsen Jr. took a moment during a U.S. Bankruptcy Court hearing Thursday in Phoenix to reassure debtor Fulton Homes Corp. and the public that he does not intend to liquidate the Tempe-based homebuilder.

Whether or not liquidation is a real possibility for Fulton Homes, its bankruptcy attorney, Craig Hansen, said public perception that the company could be dismantled has hung over its recovery effort like a dark cloud since it sought the court's protection from creditors in January 2009.

Nielsen said liquidation is an unlikely outcome to Fulton Homes' long and bumpy Chapter 11 reorganization proceedings, especially if the company's recent accounts of increased sales activity are accurate.

"It would require a major failing in this case to convince me to liquidate," Nielsen said.

Hansen said the company is eager to complete its recovery and resume a more normal existence.

The attorney urged the court to push ahead with consideration of Fulton's latest reorganization plan, the fourth it has submitted in 20 months. Hansen estimated court approval of the plan could help see the company emerge from bankruptcy by early October.

The company's creditors, which include Bank of America, JPMorgan Chase Bank, Compass Bank and Wachovia Bank, are seeking millions of dollars for unpaid debts, much of it stemming from a $250 million unsecured line of credit extended to Fulton Homes during the housing boom earlier in the decade.

Lead creditor BofA cut off the credit line in late 2008. The Charlotte, N.C.-based bank contends that Fulton Homes owes it more than $163 million.

Attorney Tim Gaffney said his client, BofA, and the other creditors need more time to review the plan, which Fulton submitted Aug. 20.

"A lot of us have questions that we need to have answered," Gaffney said, adding that 28 days is a typical review period for reorganization plans.

Nielsen agreed to give the creditors an additional week and set the next hearing date for Sept. 2.

Fulton Homes has been trying for months to fend off creditors' efforts to force a liquidation of the company.

The Tempe-based builder said in June that a successful effort to reposition the company from a luxury-home builder to a provider of lower-cost homes for first-time buyers has led to a dramatic increase in home sales and net income.

The company's attorneys also have filed court documents stating that liquidation is unnecessary because the company's turnaround would allow it to repay creditors in full.

The creditors' attorneys have complained repeatedly about Fulton Homes' refusal to provide a plan for possible liquidation or to acknowledge the possibility that liquidation provides the most beneficial outcome for creditors.

They have argued in court documents that Fulton Homes' plan to repay creditors by 2015 is based on a best-case scenario and that it would not include reimbursement for some costs such as attorneys fees.

Fulton Homes was founded in 1974 by Ira Fulton, a prominent community figure and one of the state's best-known philanthropists.

by J. Craig Anderson The Arizona Republic Aug. 27, 2010 12:00 AM



Judge: No liquidation for Fulton

Fulton Homes bankruptcy not a quick fix

Participants in the Fulton Homes Corp. bankruptcy case will meet Thursday for their fourth attempt at negotiating a reorganization plan that would allow the Tempe-based homebuilder to emerge from Chapter 11 reorganization.

It has been more than 18 months since Fulton Homes sought the U.S. Bankruptcy Court's protection in January 2009 from a group of lenders, led by Bank of America, that also includes JPMorgan Chase Bank, Compass Bank and Wachovia Bank.

The Fulton Homes case has dragged on far longer than is typical of such proceedings, primarily because of lengthy debates over whether the court should consider liquidating the company and whether creditors should be allowed to scrutinize Fulton Homes founder Ira Fulton's charitable activities.

Doug Fulton, Ira's son, is Fulton Homes' current president and CEO.

In late June, presiding Judge George B. Nielsen Jr. placed Fulton's charitable organization, the Ira A. Fulton and Mary Lou Fulton Family Trust, in contempt of court for failing to disclose financial information he had ordered it to hand over in May.

Fulton attorneys said they merely had been pursuing other options to which they were legally entitled, such as filing a motion asking Nielsen to reconsider his previous disclosure order. They also applied to a Bankruptcy Court appellate panel for a stay of Nielsen's order until the trust could pursue an appeal of the decision.

Both requests were denied.

Fulton attorneys have argued repeatedly that the family trust's finances are irrelevant to the bankruptcy case. The trust is a separate legal entity that has pledged or donated hundreds of millions of dollars, including more than $160 million to Arizona State University.

Local real-estate experts said the creditors most likely are looking for evidence that some of the money donated by the trust came directly from an unsecured line of credit that Bank of America had extended to the company back when the Phoenix area's housing market was still booming.

Bank of America cut off the credit line in late 2008. The Charlotte, N.C.-based bank contends that Fulton Homes owes it more than $163 million.

Neither the debtor nor creditors' attorneys returned calls this week seeking comment.

Fulton Homes has been trying for months to fend off creditors' efforts to force a liquidation of the company.

The Tempe-based builder said in June that a successful effort to reposition the company from a luxury-home builder to a provider of lower-cost homes for first-time buyers has led to a dramatic increase in home sales and net income.

The company's attorneys also have filed court documents stating that liquidation is unnecessary, because the company's turnaround would allow it to repay creditors in full.

The creditors' attorneys have complained repeatedly about Fulton Homes' refusal to provide a plan for possible liquidation, or to acknowledge the possibility that liquidation provides the most beneficial outcome for creditors.

They have argued in court documents that Fulton Homes' plan to repay creditors by 2015 is based on a best-case scenario, and that it would not include reimbursement for some costs such as attorneys' fees.

Fulton Homes was founded in 1974 by Ira Fulton, a prominent community figure and one of the state's best-known philanthropists.

The engineering college at Arizona State University bears Fulton's name, and its Mary Lou Fulton College of Education was named after his wife in May 2008.

by J. Craig Anderson The Arizona Republic August 25, 2010 12:00 AM


Fulton Homes bankruptcy not a quick fix

Fulton Homes opposes creditors' plan

by J. Craig Anderson The Arizona Republic Jun. 3, 2010 12:00 AM

Bankruptcy has been good to Fulton Homes, according to documents the company filed in U.S. Bankruptcy Court last week stating that it intends to repay creditors in full, with interest, over the next five years.

The Tempe-based homebuilder is trying to fend off a competing reorganization plan proposed by its creditors, led by Bank of America, that would involve liquidating the company and selling off its remaining assets. The bank claims Fulton Homes owes it more than $163 million.

In two motions filed Friday, Fulton Homes' attorneys argue that terminating the company's operations is unnecessary and would be less beneficial to creditors and to the local economy.

"BofA can no longer claim that it will not receive as much as it would if Fulton Homes were liquidated, because BofA will be paid in full, with interest, in a timely manner," the motion states. "BofA can no longer falsely claim that Fulton Homes' actions in this case are in bad faith, or designed solely for the benefit of Fulton Homes' interest holders, because BofA and other creditors will be paid in full."

According to the homebuilder, which filed for Chapter 11 reorganization in January 2009, a successful effort to reposition the company from a luxury-home builder to a provider of lower-cost homes for first-time buyers has led to a dramatic increase in home sales and net income.

Fulton Homes requested an additional 90 days to finalize its reorganization plan, but more importantly, it asked the court to dismiss permanently creditors' competing liquidation plan.

Christopher Bayley, a Phoenix attorney representing BofA in the bankruptcy case, expressed skepticism about the builder's latest vow to repay creditors by Dec. 31, 2015.

Although the company's sales have improved since it filed for bankruptcy protection, Bayley said, Fulton Homes' ability to make good on a five-year repayment plan will depend largely on the economy.

"Obviously, there's a lot of uncertainty when you're talking about repaying someone over a period of years," said Bayley, of the law firm Snell & Wilmer LLP.

Phoenix homebuilding analyst Jim Belfiore, president of Belfiore Real Estate Consulting, said Fulton Homes has performed consistently among the Valley's top-three homebuilders since filing for bankruptcy. The other top builders are Blandford Homes and Meritage Homes.

Although he acknowledged there could be unforeseen challenges ahead, Belfiore said Fulton Homes has successfully lowered the cost of its products and repositioned itself as a leader in the starter-home market, where the bulk of existing buyer demand is situated.

"For Fulton, the bankruptcy has allowed them to remake themselves as a builder," he said.


Fulton Homes opposes creditors' plan

Two Cachet Homes subdivisions in East Valley facing trustee sale

Phoenix Business Journal Jan Buchholz Friday, February 5, 2010

Wells Fargo Bank NA filed a notice of trustee sale on two subdivisions being developed by Phoenix-based Cachet Homes: the 25-acre Stratland Shadows parcel in Gilbert and the 5.6-acre Serenity Shores community in Chandler.

Both properties are scheduled to be sold at auction April 15.

Wells Fargo loaned Cachet $37.2 million for the Gilbert property and $15.8 million for the Chandler property. Neither Cachet nor Wells Fargo representatives would comment on the matter because of on­going negotiations.

“We cannot comment about this matter because our customer relationships are confidential,” said Wells Fargo spokeswoman Marjorie Rice.

Cachet is one of the few private home builders in Phoenix remaining in business despite the housing crisis of the past three years. The boutique home builder was founded in 1990.

These are not the first Cachet properties that have encountered problems.

Wells Fargo foreclosed on a 16-acre property in the Buckeye master-planned community of Verrado in February 2008. The bank took back the land from Cachet and sold it to Meritage Homes in November 2009, according to Zach Bowers, a real estate analyst with Ion Data, a Mesa research firm.

Two other properties — subdivisions in the Vistancia master-planned community in Peoria — also went back to the bank that originally financed them. RBC Centura Bank filed for foreclosure on the 19-acre and 16-acre properties in April 2008. RBC still owns those parcels, Bowers said.

Even though its Serenity Shores community is facing foreclosure, Bowers said Cachet took out three building permits Jan. 15 for single-family homes there.

“There may be other builders in similar situations to (Cachet’s), but none come to mind at this moment,” said Jim Belfiore, founder of Phoenix-based Belfiore Real Estate Consulting, which provides services to home builders. “Most of the builders that will not survive, I believe, have conceded and gone out of business.”

Ben Sage, director of Metrostudy’s Arizona division, said a few private builders — such as locally owned Fulton Homes — have been able to survive by filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Get Connected

Cachet Homes: www.cachethomes.net