A slump in demand for new homes and debts that could go up to $1 billion have forced California home builder WL Homes - which does business under John Laing Homes tag - to file for Chapter 11 bankruptcy.

Filing its documents for a Chapter 11 in the US Bankruptcy Court in Delaware on Thursday, the Irvine, California-based builder recently said in a statement that it was "reviewing all potential options to meet capital requirements."

According to the bankruptcy documents, the company, which has recently shelved its operations at many of its Silicon Valley sites, has creditors between 25,000 and 50,000. It has revolving credit facilities with banks, and other secured debt; with the largest unsecured creditors being salaried employees.

In the bankruptcy declaration, Bradley Sharp, John Laing's Chief Restructuring Officer, said that with the sale of new homes in the US declining over the past three years, the company's revenue plunged from $948 million on 1,371 homes sold in 2007, to a mere $287 million from the sale of 560 homes till last November.

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