THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF FAIRFIELD RESIDENTIAL by mlw20723

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									                                                                                  Date Filed: 3/16/2010




          THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF
                   FAIRFIELD RESIDENTIAL LLC, ET AL.



                                                          March 10, 2010


TO:         ALL HOLDERS OF GENERAL UNSECURED CLAIMS, CAPMARK
            CLAIMS AND WACHOVIA CLAIMS AGAINST FAIRFIELD
            RESIDENTIAL LLC ET AL. (Holders of Claims in Classes 2A, 2.B, 2.C, 2.D,
            2.E, 2.F and 3)

FROM:       THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF
            FAIRFIELD RESIDENTIAL LLC, ET AL.

               We are writing to you on behalf of the Official Committee of Unsecured
Creditors (the “Committee”) of Fairfield Residential LLC, et al. (the “Debtors”) in
connection with the solicitation of your vote as the Holder of a General Unsecured Claim, a
Capmark Claim or a Wachovia Claim against the Debtors (Classes 2.A, 2.B, 2.C, 2.D, 2.E,
2.F and 3) as identified and described in the enclosed Debtors’ Second Amended Joint Plan
of Reorganization Under Chapter 11 of the Bankruptcy Code (the “Plan”), which is being
proposed by the Debtors. All capitalized terms not defined in this letter are as defined in
the Plan.

          FOR THE REASONS SET FORTH BELOW, THE COMMITTEE
RECOMMENDS THAT YOU ACCEPT THE PLAN AND RETURN YOUR BALLOT
INDICATING YOUR ACCEPTANCE IN ACCORDANCE WITH THE VOTING
INSTRUCTIONS SET FORTH ON THE BALLOT.

              The Plan is the result of extensive multi-party negotiations among the
Committee, the Debtors, the Capmark Lenders, and the New Money Investors (Och-Ziff
Real Estate Acquisitions LP (“OZ”) and/or California State Teachers’ Retirement System
(“CalSTRS”)). Under the applicable circumstances, the Committee believes that Plan
provides the best possible recoveries to Holders of General Unsecured Claims, Capmark
Claims and Wachovia Claims and its acceptance is in the best interest of such Creditors.

               The Debtors estimate that the amount of General Unsecured Claims against
Fairfield and the First Tier Subsidiaries (Class 2.B) will aggregate approximately
$717,815,000. The estimated recovery for the Holders of Fairfield/First Tier Subsidiary
General Unsecured Claims (Class 2.B) will be approximately 9%. Moreover, the Debtors
estimate that the amount of General Unsecured Claims against Fairview WA (Class 2.D)
aggregates approximately $187,000 and the estimated recovery to holders of General
Unsecured Claims against Fairview WA will be 100%. Finally, the Debtors estimate that




LEGAL_US_E # 87195567.1                                    ¨0¤{Kn*#0                  E9«
                                                               0914378100316000000000037
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF
FAIRFIELD RESIDENTIAL LLC, ET AL.
March 10, 2010
Page 2

the amount of General Unsecured Claims against Homes (Class 2.C), Fairview L.P. (Class
2.D) and Fairview CA (Class 2.F) are $0 respectively.

               The Plan also establishes Convenience Classes with respect to creditors with
claims of $1,000 or less against Fairfield and the First Tier Subsidiaries or $100 or less
against Homes, Fairview L.P., Fairview WA and Fairview CA. Under the Plan,
Convenience Class Claims will be paid 100% of the value of their Allowed Claim.
Creditors also have the option under the Plan to reduce their claim to $1,000 against
Fairfield and the First Tier Subsidiaries or $100 against Homes, Fairview L.P., Fairview
WA and Fairview CA, and be treated as a Convenience Class Claim against the respective
Debtor.

              The Debtors estimate that the amount of Capmark Claims against the Debtors
(Class 2.A) will aggregate approximately $79,510,000. The estimated recovery for the
Holders of Capmark Claims (Class 2.A) will be approximately 100%.

               The Debtors estimate that the amount of Wachovia Claims against the
Debtors (Class 3) will aggregate approximately $18,168,000. The estimated recovery for
the Holders of Wachovia Claims (Class 3) will be approximately 34%.

               The Plan provides for the creation of a liquidating trust (the “Fairfield Trust”)
and a Trust Oversight Committee. The Trust Oversight Committee will be composed of five
(5) members with four (4) members selected by the existing Committee and one (1) member
selected by Capmark Finance. Upon the Effective Date of the Plan, the Fairfield Trust will
be vested with the Liquidating Assets and will make distributions to General Unsecured
Creditors pursuant to the terms of the Plan and the Liquidating Trust Agreement. The Trust
Oversight Committee will oversee the liquidation of the Liquidating Assets in the Fairfield
Trust by the Liquidating Trustee. The Liquidating Trustee will be appointed by the
Committee and Capmark Finance by a super-majority vote. The Liquidating Trustee has
also been tasked with investigating and, if necessary, prosecuting any estate causes of action
(including preference claims or other Chapter 5 avoidance actions).

               The Plan also provides for the creation of Newco which will be formed by
OZ, CalSTRS and certain of the Debtors’ management as a new entity. Newco will purchase
the Reorganized Fairfield Assets from Fairfield and FF Properties, Inc. in exchange for the
Closing Payment (in the amount of $10 million, plus $1 million to pay Professional Fee
Claims of Imperial and MJC, the Debtors’ financial advisors). Reorganized Fairfield will
provide certain management services to the Fairfield Trust for asset management fees.
Reorganized Fairfield has also agreed to reduce the asset management fees payable by the
Fairfield Trust by $2.5 million during each of 2011 and 2012. Newco will be managed by
five managers, three of whom will be selected by OZ and CalSTRS (with a total of five
votes), one of which will be selected by the Debtors’ management (with one vote), and one


LEGAL_US_E # 87195567.1
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF
FAIRFIELD RESIDENTIAL LLC, ET AL.
March 10, 2010
Page 3

of whom will be selected by the Trust Oversight Committee (with one vote). The Trust
Oversight Committee’s board seat and vote will be given to CalSTRS on the last day of the
first month in which no asset management fees are payable by the Fairfield Trust (except to
the extent CalSTRS no longer holds an equity interest in Newco at such time, in which case
the Trust Oversight Committee’s board seat and role will be eliminated).

              For the purpose of voting on the Plan, the Debtors have provided you with a
ballot, which should be completed by you for either accepting or rejecting the Plan and
mailed in accordance with the procedures set forth on the ballot and in the Disclosure
Statement.

            THE COMMITTEE ENDORSES THE PLAN AND RECOMMENDS
THAT ALL HOLDERS OF GENERAL UNSECURED CLAIMS, CAPMARK
CLAIMS AND WACHOVIA CLAIMS VOTE TO ACCEPT THE PLAN.
NOTWITHSTANDING OUR RECOMMENDATION, EACH CREDITOR (INCLUDING
INDIVIDUAL COMMITTEE MEMBERS) MUST MAKE THEIR OWN INDEPENDENT
DETERMINATION AS TO WHETHER THE PLAN IS ACCEPTABLE TO THAT
CREDITOR AND SHOULD CONSULT THEIR OWN LEGAL AND/OR FINANCIAL
ADVISOR(S).

                                           THE OFFICIAL COMMITTEE OF
                                           UNSECURED CREDITORS OF
                                           FAIRFIELD RESIDENTIAL LLC, ET AL.




LEGAL_US_E # 87195567.1

								
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