* Judge approves plan for a Chinese Drywall Trust
* To issue $300 mln in new WCI senior secured term notes

(Updates with details from plan of reorganization)

A bankruptcy judge on Wednesday approved a plan of reorganization for luxury home builder WCI Communities Inc (WCIMQ.PK), according to court documents, helping clear the way for the company to emerge from Chapter 11 bankruptcy protection.

Judge Kevin Carey confirmed the second amended plan in which the company, once led by Carl Icahn, will transfer its equity to lenders and issue them new debt.

The judge also approved the company's plan to establish a Chinese Drywall Trust for people living in homes with tainted drywall and a trustee will distribute the assets.

The company will issue new WCI common stock and $300 million in new WCI senior secured term notes, according to the court documents.

The Florida-based luxury builder filed for bankruptcy protection in August.

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The case is: in Re: WCI Communities Inc, U.S. Bankruptcy Court, District of Delaware, No. 08-11643. (Reporting by Chelsea Emery; editing by Robert MacMillan and Andre Grenon)

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