Builder bankruptcy updates

Hansen & Horn to be liquidated, leaving unpaid bills and unfinished houses. Those having a claim against the co's assets will likely get very little back.

Orleans Homebuilders leaves development half finished upon filing for bankruptcy.

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March 2010

By: David Barras
INDIANAPOLIS (WISH) - Indianapolis homebuilder Hansen & Horn is insolvent and will be liquidated.

Since November, 24-Hour News 8 has documented the dozens of complaints and lawsuits filed against Hansen & Horn. Wednesday's decision puts an end to the company but it may not be a happy ending for those who are still owed thousands of dollars.

Founded in 1977, Hansen & Horn had been one of the leading Indianapolis-area homebuilders. But over the past couple of years, it has left a string of unpaid subcontractors and clients with unfinished homes.

Wednesday, Judge Heather Welch officially put an end to Hansen & Horn. In her ruling, the judge cited the company's $14.5 million in liabilities against just $7 million in assets, saying, "The court hereby orders that H&H Group and H&H Inc. shall be completely liquidated by the receiver."

Banks holding mortgages on some of the Hansen & Horn property had asked the judge to let them take control of that property.

But she ruled against the banks, saying, "The receiver accept purchase offers to sell the real estate and to sell such real estate free and clear of all liens...."

Objections to the sale price of the real estate however can be filed by the banks.

Those who are owed money have until April to file a claim with the court.

But with so few assets compared to its liabilities, it's likely claimants will get pennies on the dollar, if anything at all.

Ward Horn's attorney did not return a call from 24-Hour News 8 Wednesday.

While the ruling puts an end to Hansen & Horn, it does not mean the end of possible problems for the owners of the company.

One of those who lost hundreds of thousands of dollars said they are having their lawyers pursue potential criminal charges.

http://www.wishtv.com/dpp/news/business/indianapolis-home-builder-hansen...
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Bucks builder's bankruptcy halts Upper Saucon home construction
Residents wonder if Orleans Homebuilders' 349-home project will ever be finished

One of the largest housing projects under construction in Upper Saucon Township will be put on hold indefinitely because the Bucks County builder has filed for bankruptcy protection.

The 349-home Liberty Village project by Orleans Homebuilders of Bensalem is less than half finished, according to township officials. Construction will continue on homes that have been started, but all new construction will be put on hold, according to the company.

That leaves residents like Greg Wilsker wondering when the development will be completed, and by whom.

''There's dust that comes up every time they excavate a new site,'' said Wilsker, 29, a medical equipment salesman who bought his townhouse three years ago. ''You just want it completed.''

Home values are higher in developments that have been completed, said Wilsker, who learned of the company's bankruptcy by reading about it on The Morning Call's Web site.

Orleans on Monday filed for Chapter 11 protection, which means it wants to restructure the company and continue conducting business. The company, which also is wrapping up a 100-home project in Lower Macungie Township, last month defaulted on a $350 million loan.

It is the latest sign of trouble in the beleaguered housing market, where a high unemployment rate, shaken consumer confidence and tighter lending standards have cut deeply into sales.

Nationally, sales of new U.S. homes dropped 11.2 percent in January to the lowest rate on record dating back to 1963, according to the Commerce Department. The bleak performance came despite generous government tax incentives to encourage home buying.

Orleans, which has been building homes on the East Coast for more than 90 years, has been hit particularly hard by the housing downturn. Its residential revenues declined two-thirds from just under $1 billion in 2006 to about $322 million in 2009, chief executive officer Jeffrey Orleans said in a news release about the bankruptcy.

The bankruptcy filing has Upper Saucon officials worried about a project lingering uncompleted and those living there wondering if the proposed pool will ever be built or their neighborhood completed. The 60-acre project includes mostly townhouses priced in the $200,000 to low $300,000 range and 14 detached homes starting at about $400,000.

''My concern is are they going to finish the development?'' said Debbie Belaus, 54, a yoga instructor and massage therapist who lives in the townhouse section of Liberty Village with her husband and daughter. ''In this market, they could sit here for a long time.''

Across the street from her home, a line of concrete foundations poked naked out of the ground amid piles of dirt, snow and an idle front end-loader. Belaus moved into the development, part of which sits perched on a ridge overlooking Route 309, about 18 months ago. She said she's unhappy the promised pool still remains unfinished.

''We were hoping for the pool,'' she said.

Throughout Liberty Ridge, empty home sites sit waiting, sewer and water lines poking out of the ground.

Belaus, and other residents like Dana Kleppinger, 29, a Southern Lehigh Middle School teacher, said they've been happy with the quality of the homes and the builder's responsiveness. They said they were drawn by the location, close to I-78, Route 22 and the Pennsylvania Turnpike.

''I guess there's nothing much you can do about it at this point,'' said Kleppinger, who lived at home and saved for several years to buy her three-bedroom townhouse about a year and a half ago.

Township officials said their first priority is making sure public improvements such as roads and sewers get completed.

''I don't think empty homes is a good thing for anyone,'' Upper Saucon Township Manager Tom Beil said. ''We would be willing to work with the developer any way we can to make sure we don't have a development that is half-built, or there are empty homes, but that is really something that is out of our control.''

Whether construction resumes hinges on the outcome of Orleans' restructuring plan and a potential sale of the company to a new owner. Orleans, which has been seeking a buyer since before filing for bankruptcy protection, said it will continue to try to sell the company while it reorganizes.

The bankruptcy filing also has repercussions for those who put deposits down on Orleans homes and those who purchased Orleans homes under warranty. In addition to the Upper Saucon project, Orleans is putting the finishing touches on its 100-home ''Beaumont at Brookside'' development in Lower Macungie Township.

Construction began in 2005 and is essentially finished, except for some final details, said Lower Macungie township engineer Bill Erdman said.

Orleans said it has filed for permission with the court to continue all home warranty and mortgage incentive programs and to preserve all customer deposits on homes that pre-date the bankruptcy filing.

''The company believes all existing customer deposits are protected in segregated escrow accounts and are not affected by [the bankruptcy] filing,'' Orleans said.

Allentown attorney David Dunn, who specializes in bankruptcy law, said consumer deposits are protected up to $2,425. That means deposits up to that amount would be repaid before unsecured creditors are paid, he said.

But homeowners with warranties could have trouble getting claims paid as a result of the filing, Dunn said.

''Let's suppose they have to replace a screen door for $300 or pay $10,000 because the porch fell down, it would be on the bottom of the pecking order,'' Dunn said.

Stephen Thode, a finance professor and director of the Murray H. Goodman Center for Real Estate Studies at Lehigh University in Bethlehem, said the filing indicates the housing market has yet to bottom out since consumers remain worried about their jobs.

''Jobs drive real estate,'' Thode said. ''Construction is not likely to come back for some time, and construction is a significant part of our entire economy.''

Orleans listed assets of $591.4 million and debt of $560.1 million in Chapter 11 documents filed in U.S. Bankruptcy Court in Wilmington, Del.

http://www.mcall.com/news/local/all-5orleans-box.7195247mar04,0,7856330....
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For more on builder bankruptcies see the Builder Implode site: http://builder-implode.com/