Levitt Corporation may have misrepresented the financial condition of its operating subsidiary Levitt & Sons, announcing a merger which artificially inflated the stock price of Levitt when in fact it was insolvent.
This is a securities class action lawsuit against Levitt Corp. and certain of its officers and directors.
Levitt, together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States.
According to the class action complaint, on January 31, 2007, Levitt announced that it agreed to merge with BFC Financial Corp ("BFC"). Based on BFC stock's closing price on the previous trading day, the proposed transaction valued Levitt stock at $14.41 per share - a premium of 32 percent over the closing price of $10.88 per share on the previous trading day. The class action complaint alleges that, during the Class Period, defendants issued materially false and misleading statements and failed to disclose:
(i) that the Company's Levitt and Sons subsidiary was in much worse financial condition than publicly represented. Levitt and Sons was saddled with excessive amounts of unneeded and overpriced land which would not be feasible to develop for some time. Furthermore, Levitt and Sons was struggling to complete projects it had already begun and in many instances was failing to complete construction of homes that it had already sold as it lacked the financial resources to follow through on its contracts;
(ii) that as a result of the foregoing, Levitt was materially overstating its financial results because it was failing to timely record an impairment in the value of its homebuilding inventory at Levitt and Sons. Although Levitt acknowledged the difficult housing market, their public statements failed to advise investors of the true financial condition of Levitt;
(iii) that Levitt's loans and advances to Levitt and Sons would not be recovered as the subsidiary lacked the financial resources to pay now and in the foreseeable future; and
(iv) that Levitt and Sons was insolvent.
Then, on August 15, 2007, Levitt announced that the merger agreement with BFC had been terminated, without giving any explanation. Upon this news, shares of th Levitt's stock fell $0.79 per share, or over 21%, to close at $2.96 per share.
Subsequently, on November 9, 2007, it was announced that Levitt and Sons filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
Name (Stock Symbol)
Levitt Corporation (WDGH.PK)
Levitt Corporation has changes its name to Woodbridge Holdings Corporation. It, together with its subsidiaries, operates as a real estate development company in the southeastern United States
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