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US building giant files for bankrupcy

John Laing Homes, which was bought for $1.05 billion in 2006 by Dubai based Emaar Properties, has 105 real estate developments in Colorado, California, Arizona and Texas.

A statement from John Laing Homes confirmed that it, along with a number of its affiliates, had elected to file Chapter 11 petitions in the US Court for the District of Delaware.

'John Laing Homes anticipates that the Chapter 11 process will allow it to significantly reduce debt from its balance sheet while facilitating a strategic reorganisation of the company, which will place it in the strongest possible position to sustain its momentum despite extremely challenging market conditions,' the statement said.

The company added that it plans to use a debtor-in-possession line of credit to maintain operations. It filed several motions to allow it to pay employees, hire bankruptcy lawyers and retain restructuring specialists.

It was known that the company was facing financial difficulties because of the economic downturn. Its workforce was cut from 1,100 to about 90 in recent months, the court documents reveal.

Emaar Properties invested a further $613 million into the business but even this was not enough to save the business, the documents also show. Emaar has said that write downs on its US business was one reason why its profits for 2008 took a hit.

John Laing Homes was the second largest builder in the US at the peak of the property boom and built about 3,000 homes a year. Now it has up to 50,000 creditors, the court documents show.