So, how’s this housing thing going? Soft landing, you say? Buy the homebuilders’ stocks, they’re a great value?
I don’t know. Kara Homes, a New Jersey homebuilder, is filing for Chapter 11 bankruptcy protection:
David Bruck, the company’s bankruptcy lawyer, said the company laid off 100 workers this week, leaving it with 70, but it would take steps to continue operating. Among them: It wants to find financing to finish developments currently under construction and sell two or three uncompleted projects to other developers…
Kara’s bankruptcy marks a dramatic turnaround. The company built 590 homes and had $288 million in sales in 2005, making it the 127th biggest builder nationwide, according to Builderonline.com. It was named the fastest-growing builder in the nation as recently as 2002 by Builder Magazine.
The fallout from Kara’s bankruptcy is far-reaching. The filing lists thousands of creditors. Among the largest unsecured creditors — those with no collateral to rely on — in Monmouth and Ocean counties are: RWZ Inc. Stairs & Rails of Lakewood, which is owed $890,654; Benchmark Inc., also of Lakewood, owed $876,585; and Michael J. Wright Construction Co. Inc. in Dover Township, owed $780,309.
Oh, and Hovnanian (HOV) is chopping heads:
Faced with rising inventories of unsold homes, Hovnanian Enterprises said it plans to ax executive and field jobs to improve its bottom line and weather what the Red Bank-based home builder describes as “the steepest decline in new-home sales in our memory.”
In an internal memo to employees dated Oct. 3, Chief Executive Ara K. Hovnanian said an unspecified number of staff reductions were necessary in order “to remain healthy,” as the nation’s eighth-largest U.S. home builder grapples with the broad downturn plaguing its industry.
“In many locations, including corporate headquarters, we have been forced to face the fact that we no longer have enough work for all of our Associates,” Hovnanian wrote. “We consider this action to be a last resort, but business realities demand action in order for our company to remain healthy and to maximize our performance in a difficult market environment.”
I’m thinking this isn’t quite over just yet…
Hat tip to Mish and his commentors.
