Wednesday, October 24, 2007

Michigan Homebuilder Goes Belly-up

As predicted homebuilders around the nation are starting to file for bankruptcy.

WARRENVILLE, Ill. (AP) — Neumann Homes Inc., a large homebuilder in Detroit, Chicago, Denver and Wisconsin, is filing for Chapter 11 bankruptcy protection because of the slump in housing markets.

The company said late Monday that it had been unable to secure adequate funding to operate its business and had closed its sales, production and customer service offices. It said it has laid off most of its employees, but did not give a number.

Chief Executive Kenneth Neumann blamed the situation on a "significant downturn" in housing markets in Detroit, Chicago and Denver.

"Even after the significant help we have received from our lenders this year, the company can no longer weather this storm," he said in a statement.

As the housing crisis worsens we are going to see a lot more builders take the chapter 11 route. I think the only builders that survive will have to have the capital reserves to "weather the storm" untill 2010, 2011 when the market will start to recover. This is clearly just the beggining.

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