Letter to Subcontractors and Suppliers About the Claims Process

Woodside Group, LLC. Subcontractor/Supplier Q&A

1. I am in the middle of constructing a home for Woodside. Am I required to finish the project?
Yes, all contracts with Woodside are unaffected by the entry of an Order for Relief and will continue unless the Company determines otherwise. We plan on completing all homes in our current backlog. In fact, we do not expect our homebuilding efforts to be impacted by the Chapter 11 filing. Despite the challenging market conditions, our operations remain solid.

2. Will I be paid for amounts owed to me before the Company’s Order for Relief was entered?
Unfortunately, the Bankruptcy Code precludes payment for goods and services received before August 20, 2008, the date of the involuntary filing. Payments on this pre-petition indebtedness will either be paid pursuant to Court authority or be settled as part of a plan of reorganization, which must be accepted by our creditors and approved by the Court. However, if you are a subcontractor with a perfectible lien right (like a mechanics or materialman’s lien) that could be perfected by filing a valid lien, Woodside intends to pay you in full pursuant to the Court order “Establishing Procedures for Payment of Operational Lien Claims and Certain Administrative Expense Claims.” Additionally, if you delivered goods to Woodside in the 20 days prior to the involuntary filing, July 31—August 19 and you do not have a perfectible lien right, you will be entitled to a priority claim (which is likely to be paid in full on or before the effectiveness of a reorganization plan). If you provided goods or services during the gap period between August 20 and September 16, when Woodside consented to the bankruptcy filings and you do not have a perfectible lien right, you also will be entitled to a priority claim.

3. Will I be paid for work performed after the Order for Relief date?
Yes, goods and services received after the Order for Relief date will be paid for in the ordinary course. You will receive payment in the ordinary course of business for post-relief goods and services on the same terms as existed before.

4. What about services provided during the gap period?
If you are a subcontractor with a perfectible lien right as discussed in question 2 above, Woodside intends to pay you in full, pursuant to the Court order “Establishing Procedures for Payment of Operational Lien Claims and Certain Administrative Expense Claims.” If you provided goods or services during the gap period between August 20 and September 16, when Woodside consented to the bankruptcy filings and you do not have a perfectible lien right, you will be entitled to a priority claim.

5. How do I make sure I get paid under the terms of a Plan of Reorganization?
Early in the bankruptcy case, Woodside filed schedules of all known creditors and the amount Woodside believes each creditor is owed. In the case of subcontractors, suppliers, and consultants all amounts were scheduled as contingent, unliquidated and/or disputed (CUD). This was done in an effort to have each subcontractor, supplier, or consultant confirm the amount and the debtor that owed the amount through the subcontractor, supplier, or consultant filing a proof of claim. Therefore, if you appear on the schedules, you must file a proof of claim per the instructions on the proof of claim form. Moreover, if you do not appear on the schedules then you must submit a proof of claim. Not long ago the Court sent out a Notice of Commencement that included a proof of claim form. As part of this process, the Court has also set a deadline for all claims to be filed. This deadline is known as the Bar Date and has been set as January 31, 2009. You should have received a notice of this deadline along with another proof of claim form. If it is determined that you have an allowed claim, you will be eligible to receive the treatment as described in a Plan of Reorganization.

6. Do I need an attorney to file a claim?
You are not required to hire an attorney to file a claim but you may choose to do so.

7. What about for work started pre-petition (August 20, 2008) that won’t be completed until after the filing of the Order for Relief?
We will pay the portion relating to the estimated post-relief (September 16, 2008) work. If you are a subcontractor with a perfectible lien right (like a mechanics or materialman’s lien) that could be perfected by filing a valid lien, payment for the pre-petition and gap-period portion of the work may be paid pursuant to the Court order “Establishing Procedures for Payment of Operational Lien Claims and Certain Administrative Expense Claims.” Moreover, if you provided goods or services during the gap period between August 20 and September 16, when Woodside consented to the bankruptcy filings, you are entitled to a priority claim.

8. How long will it be for ordinary payments to resume?
Payments for goods and services received on or after the Order for Relief date will be paid in the ordinary course on regular check-run days.

9. What if I have an uncashed check from Woodside?
Unfortunately, federal law requires the Company to cancel any checks for pre-petition goods and services that have not been cashed or deposited by the September 16 Order for Relief date unless the check relates to a claim that the Company has received Court authority to pay. If your check is cancelled, you may have to file a claim unless your claim amount is properly identified by the Company on the schedules that will be filed with the Court, or you have a perfectible lien right as to that item. You will receive instructions about how to file a claim in the coming weeks. We sincerely regret any hardship this may cause. Be assured that the Company is working diligently to ensure prompt payment of all claims (pre-petition and gap-period) it is authorized to pay pursuant to Court orders.

10. What if I wait to submit an invoice, will that ensure payment?
The critical factor is not when the invoice was received, but when the work was performed. Work performed before the involuntary filing date (August 20, 2008) is considered pre-petition (and is subject to the Answer for Question #2), regardless of when you submit your invoice.

11. Can I re-submit past invoices and get paid for them now?
Unless the past invoices represent work for which there remains a valid lienable right for which payment was merely overlooked, the answer is no. The provisions of the U.S. Bankruptcy Court prohibit Woodside from paying any pre-relief (prior to September 16) invoices regardless of when the invoice is submitted, unless otherwise authorized by the Court.

12. Why should I continue to work with Woodside when the Company is having such financial difficulties?
Because, going forward, you will be paid in full for goods and services provided from September 16 and thereafter as required by the U.S. Bankruptcy Code. Moreover, if you delivered goods to Woodside in the 20 days prior to the involuntary filing, July 31—August 19, and your are not already slated to be paid or have been paid pursuant to your perfectible lien rights, you will be entitled to a priority claim which is likely to be paid in full on or before the effectiveness of a reorganization plan. Similarly, if you provided goods or services during the gap-period between August 20 and September 16, when Woodside consented to the bankruptcy filings, and you are not already slated to be paid or have been paid pursuant to your perfectible lien rights, you also will be entitled to priority status. We sincerely regret any hardship or inconvenience this may cause you. Be assured that the Company is working diligently to ensure prompt payment of all claims (pre-petition and gap-period) it is authorized to pay pursuant to court orders.

13. Other homebuilders have said Woodside will have to go out of business. How do I know you will be around in a year?
Our operations remain solid and Woodside’s brand recognition remains strong. Chapter 11 allows Woodside to achieve its restructuring in an orderly and timely manner, and enables Woodside to restructure its debt while maintaining its ongoing business. We expect Woodside’s daily operations to continue as usual. We will continue to build the same high-quality homes while providing excellent customer service. In fact, customers and prospective customers should not see any impact from the filing. Many companies that have filed for reorganization, including NVR, Inc. (Ryan Homes), Continental Airlines, Delta Airlines, Texaco, Macy’s, Amerco, Inc. (U-Haul), The Southland Corp (7- Eleven) and K-Mart, have strengthened their businesses and are performing well today.

14. Given the uncertainty of the situation, I want to renegotiate my terms with Woodside.
We are operating in the normal course and handling all payment obligations as before the filing. We expect in the months and years ahead to be as good a customer to you as we have been in the past. We hope you will continue to work with us.

15. Can I be paid in cash, or at least in advance?
We are operating in the normal course and handling all payment obligations as before the filing. We expect in the months and years ahead to be as good a customer to you as we have been in the past. We hope you will continue to work with us.

16. I want my merchandise back, and I’m sending someone to get it.
Taking back goods from a company that has filed Chapter 11 is against the law without prior authorization of the Bankruptcy Court. Check with your legal counsel before taking any such action.

17. Where may I send a letter of reclamation?
Letters of reclamation should be mailed to: Linda Cantor, Esq. Pachulski, Stang, Ziehl & Jones LLP 10100 Santa Monica Blvd., 11th Floor Los Angeles, CA 90067 310-277-6910 ph 310-201-0760 fax Or Dave Park, Esq. Woodside Group, LLC 39 East Eagleridge Drive, Ste. 102 North Salt Lake, UT 84054 801-299-6700 ph 801-813-8003 fax

18. How do I file a proof of claim?
A complete list of creditors, including your company, is being prepared by our attorneys. Our claims and noticing agent, Kurtzman Carson Consultants (KCC) will be sending official notice of the filing and the first creditors’ meeting to all listed creditors. Sometime after the first creditors’ meeting, the Court will set a deadline for filing proofs of claim and you will be mailed a notice telling you of the deadline, or “Bar Date,” along with a claim form. All claims will be filed with Kurtzman Carson Consultants. If you wish to file a proof of claim sooner, please contact them at (866) 381-9100 for a proof of claim form and filing information.

19. I want to be placed on your critical vendor list, who do I need to call/email?
I’m sorry; there is no critical vendor list. In the Central District of California, Riverside Division, the jurisdiction where the case is pending, critical vendors are not typically approved.

20. If I am an unsecured creditor, who is looking after my interests?
The U.S. Trustee, an arm of the Justice Department, will most likely appoint a committee of unsecured creditors to oversee the interests of all unsecured creditors in the case.

21. Are my liens protected?
Yes. And to avoid any disruption, we have been granted Court authorization to “Sell Homes Free and Clear of Liens, Claim, Encumbrances and Other Interests,” and are “Establishing Procedures for Payment of Operational Lien Claims and Certain Administrative Expense Claims.”

22. Will you ask me to lower my prices?
Our business decisions will be based upon the same criteria as before the filing and will not be affected by the restructuring. We continue to apply the factors of quality, service, delivery, and pricing as the basis for our decisions.

23. Will my work schedule change?
The restructuring should have no impact on construction schedules.

24. I received some legal documents in the mail. What are they and what should I do with them?
Under the U.S. Bankruptcy Code, Woodside is required to provide “notice” of the Chapter 11 filing to potential creditors, or those who have engaged in business with the company. As such, you have likely received what is called the “Notice of Commencement.” This does not require any action on your part as it was sent for informational purposes. Moreover, throughout the process you will be receiving additional notices including the meeting of creditors or “341 Notice” and the “Notice of Bar Date” which will have a claim form attached along with the deadline on which claims must be received—the Bar Date.

25. I have additional questions. Who can I speak with?
If you have any questions or concerns, please do not hesitate to call our toll-free information hotline at (888) 733-1541 and visit the Reorganization Section of our website at www.woodside-homes.com. You can also contact your normal Woodside representative.