Case 09-14814-lbr

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Nile Leatham (N Bar No. 002838)

KOLESAR & LEATHA

Electronically Filed: June 25, 2009

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Wells Fargo Financial Center 3320 W. Sahara Ave. Las Vegas, NY 89102
Telephone: 702.979.2357

Facsimile: 702.362.9472
E-Mail: nleatham(1klnevada.com

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Ira S. Dizengoff (N Bar No. 2565687) Philip C. Dublin (N Bar No, 2959344) Abid Qureshi (NY Bar No. 2684637)
AKIN GUM STRAUSS HAUER & FELD LLP
New

One Bryant Park York, NY 10036

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Telephone: 212.872.1000

Facsimile: 212.872.1002
E-Mail: idizengoff(qakingump.com

pdubliniakingumo.com
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aqureshi(1akingump. com

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Counselfor the First Lien Steering Committee

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UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA SOUTHERN DIVSION

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INRE:
THE RHODES COMPANIES, LLC, aka "Rhodes Homes," et at.,
Debtors. i

Case No. 09-14814-LBR

(JointIyAdministered)

Chapter 11
Hearing Date: June 26, 2009 Hearing Time: 1:30 p.m.

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i The Deblors in these cases, along wilh lhe lasl four digits of each Debtor's federa tax identifcation
number, if applicable, are: Heritage Land Company, LLC (2918); The Rhodes Companes, LLC (3060); Rhodes
Ranch General Parnership (1760); Tick, LP (0707); Glynda, LP (5569); Chalkine, LP (0281); Balcave, LP (6837);
Jackke, LP (6189); Walboard, LP (1467); Overfow, LP (9349); Rhodes Ranch Golf and COlUtry Club (9730);

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Tuscany Acquisitions, LLC (0206); Tuscany Acquisitions 11, LLC (8693); Tuscany Acquisitions 1l, LLC (9777); Tuscany Acquisitions iv, LLC (0509); Parcel 20 LLC (5534); Rhodes Design and Development Coip. (1963); C&J Holdings, Inc. (1315); Rhodes Realty, Inc. (0716); Jarpa LLC (4090); Elkorn Investments, Inc. (6673); Rhodes Homes Arizona, LLC (7248); Rhodes Arizona Propertes, LLC (8738); Tribes Holdings LLC (4347); Six Fealhers
Holdings, LLC (8451); Elkorn Parers, A Nevada Limiled Parership (9654); Bravo Inc. (2642); GlUg-Ho
Concrete, LLC (6966); Geronimo Plumbing, LLC (6897); Apache Framig, LLC (6352); Tuscany Golf Countr Club,

LLC (7132); Pincle Grding, LLC (4838).

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Affects:
~ All Debtors

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STATEMENT OF THE FIRST LIEN

D Affects the following.
Debtor(s)

STEERIG COMMTTEE WITH

RESPECT TO DEBTORS'

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EMERGENCY MOTION FOR AN ORDER EXTENDING CASH COLLATERAL TERMNATION DATE

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The First Lien Steering Committee (the "First Lien Steering Committee"), consisting of
certain unaffiliated lenders under the Credit Agreement dated as of November 21, 2005 among

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Heritage Land Company, LLC, The Rhodes Companies, LLC, and Rhodes Ranch General
Partnership, as the Borrowers, the Lenders Listed Therein as the Lenders, and Credit Suisse,
Cayman Islands Branch, as Administrative Agent, Collateral Agent, Syndication Agent, Sole

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Bookrunner and Sole Lead Arranger, by and through its undersigned counsel, hereby fies this

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statement (the "Statement") with respect to the Debtors' Emergency Motion for an Order
Extending Cash Collateral Termination Date (the "Motion"). In support of this Statement, the
First Lien Steering Committee respectfully represents as follows:
ST A TEMENT2

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On June 16, 2009, the Debtors fied the Motion seeking to extend their use of the First
Lien Lenders' cash collateral through October 2, 2009. Subsequent to the filing of the Motion,

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the First Lien Steering Committee agreed to a limited extension of the Debtors' use of cash
collateral through July 17, 2009. The purpose of this Statement is to advise

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the Court and parties

in interest of the First Lien Steering Committee's reason for agreeing to such a limited extension
of

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the Cash Collateral Termination Date.

As the Court is aware, in the early days of

these chapter 11 cases, the relationship between

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the Debtors and James Rhodes, on the one hand, and the Debtors' First Lien Lenders, on the
l Terms not olherwise defined herein shall have lhe meangs ascribed 10 such terms in lhe Motion.

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other, was extremely contentious. Despite a significant level of mistrust among the parties, the
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Debtors, James Rhodes and the First Lien Lenders were able to reach agreement on terms for the
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Debtors' use of cash collateral in order to provide the paries an opportnity to negotiate a
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consensual restructuring for the Debtors. Unfortnately, despite prolonged negotiations, the
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Debtors, James Rhodes and the First Lien Steering Committee have been unable to reach
agreement on the terms of a global resolution to the Debtors' chapter 11 cases. Indeed, the First

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Lien Steering Committee no longer believes that a transaction acceptable to both the First Lien
Steering Committee and James Rhodes, in his individual capacity and on behalf of

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his non-Debtor
time, if ever.

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affliates, can be achieved within a reasonable amount of

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Notwithstanding the foregoing, the First Lien Steering Committee has agreed to a limited

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extension of the Cash Collateral Termination Date in order to negotiate a more streamlined plan
of reorganization with the Debtors (but not James Rhodes individually or his non-Debtor
affliates) and the offcial committee of

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unsecured creditors (the "Creditors' Committee") recently

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appointed in the Debtors' chapter 11 cases. The First Lien Steering Committee is cognizant of

the

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Court's apprehension for "piece meal" cash collateral extensions, but believes it may be diffcult
to negotiate a consensual plan with the Debtors in light of James Rhodes' multiple non-fiduciary

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interests in the Debtors. Accordingly, while the First Lien Steering Committee is committed to
achieving the objective of a consensual restructuring with the Debtors and the Creditors'

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Committee (and initial discussions on this new course of action of have been productive), the

First Lien Steering Committee is not wiling to consent to a prolonged use of cash collateral
absent an agreement in principle on the terms for the Debtors' emergence from chapter 11. In that
regard, the First Lien Steering Committee is unlikely to consent to a further extension of

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the Cash

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Collateral Termination Date beyond July 17, 2009 if the current restructuring negotiations prove
unsuccessfuL. Indeed, absent agreement with the Debtors and/or the Creditors' Committee on the
terms of a plan of reorganization or other restructuring transaction (and the process and timeline

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for consummating any such transaction) prior to July 17, the First Lien Steering Committee
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anticipates objecting to the Motion and the Debtors' pending requests to extend their exclusive
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periods to fie and solicit acceptances to a plan of reorganization.

Dated this 25th day of June 2009. ",I . rL

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../i~ . By:I ~

Ne Leatham (N Bar No. 002838) KOLESAR & LEATHA

Wells Fargo Financial Center 3320 W. Sahara Ave. Las Vegas, NY 89102 (702) 979-2357 (Telephone)
(702) 362-9472 (Facsimile) Nleatham(1klnevada. com

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AKIN GUM STRAUSS HAUER & FELD LLP Ira S. Dizengoff (N Bar No. 2565687) Philip C. Dublin (NY Bar No, 2959344)
Abid Qureshi (N Bar No. 2684637)

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One Bryant Park New York, New York 10036 (212) 872-1000 (Telephone)
(212) 872-1002 (Facsimile)

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idizengoff(1akingump. com pdublin(1akingump. com aqureshi(1akingump. com

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Counselfor the First Lien Steering Committee

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