Fairfield reorganization, Brookfield sale approved

* Brookfield Asset Management to buy selected assets

* Reorganization to be completed Aug. 1

By Tom Hals

WILMINGTON, Del., July 6 (BestGrowthStock) – Fairfield Residential
LLC received court approval on Tuesday for its plan of
reorganization, clearing the way for Brookfield Asset
Management Inc to acquire assets of the developer of
multifamily housing.

Delaware’s Bankruptcy Court approved a plan in which
Brookfield (BAMa.TO: ) will acquire the reorganized operations
for around $19 million, according to court documents. In
addition, Brookfield and Fairfield’s management will invest
just over $28 million to recapitalize the company, which builds
and manages apartment buildings and attached homes.

The San Diego company filed for bankruptcy in December,
caught by falling prices for real estate and a lack of credit
that prevented the company from refinancing its debt.

The Brookfield deal is expected to close on Aug. 1. The
operations that Brookfield did not buy, such as joint venture
partnerships and a portfolio of low-income housing, will be
liquidated by a trustee over the next several years.

The money raised from those sales along with the payment
from Brookfield will go to pay off creditors, according to
Richard Chesley, an attorney with Paul, Hastings, Janofsky &
Walker, which represented Fairfield.

The company had revenues of $952.9 million in 2008, its
last full year before bankruptcy, and filed for court
protection with $1.2 billion in assets and $978 million in
total liabilities, according to court documents.

It also had about $3 billion of contingent liabilities
stemming from guarantees by the company on projects by related
businesses that were not part of the bankruptcy. The value of
those guarantees would be evaluated by a third party and
holders of the guarantees will receive a general unsecured
claim, Chesley said.

General unsecured creditors will likely recover 9 cents on
the dollar of their claims, the company said in court
documents.

Fairfield Residential was formed in 1997 by the Fairfield
Companies and Morgan Stanley Real Estate Fund II. The company
has about 200 separate projects ranging from undeveloped land
to fully operational developments. It manages about 55,000
apartments, according to court documents.

The California Teachers Retirement System and a subsidiary
of Mitsubishi Corp (8058.T: ) were also investors. They will not
recover anything for their ownership stake.

The company employed about 2,000 people when it filed for
bankruptcy.

The case is In re Fairfield Residential LLC, U.S.
Bankruptcy Court, District of Delaware, No. 09-14378.
(Reporting by Tom Hals; editing by Andre Grenon)

Fairfield reorganization, Brookfield sale approved