The crisis in US housing market has compelled, the high-profile luxury builder, WCI Communities to undertake major policy changes. WCI plans to file for Chapter 11 protection under the US Bankruptcy Code as well as replace it top management personnel. These measures come after the builder was unable to get additional financing to tide over huge loans.

Under Chapter 11, WCI plans to restructure its massive debts which at present amount to $1.8 billion. The company will also be replacing its CEO Jerry Starkey with David Fry. Company chairman Carl Icahn revealed that the filing became unavoidable when some holders of WCI’s $125 million convertible notes rejected the exchange offer and instead demanded to be paid in cash by August 5, this year.

WCI is known for building luxury housing communities in Florida for wealthy and retired buyers who flock to the balmy state from New York and Washington D.C. the builder was forced to file for bankruptcy as the housing boom, particularly in Florida, crashed due to speculative building and easy availability of money. The future seems shaky for WCI which though will continue to operate under Chapter 11 for now. Whether or not it will recover from bankruptcy will depend upon market conditions as well as upon the flexibility of the lenders.

-Kalyani Mookherji