On Christmas Eve, coal filled the stocking of Barratt American Inc., as the company filed for Chapter 11 protection in the U.S. Bankrupcty Court for the Southern District of California.

Mick Pattinson, president of Barratt American, said the company will "continue to build custom homes and fire replacement homes as we sell existing assets and reorganize our company with a view to re-commencing new-home construction in 2010. We do not foresee any recovery in the housing market that would prompt speculative home development in 2009."

According to court documents, Barratt American owes approximately $21 million to creditors; Bank of America claimed the builder owes it approximately $79 million--a number Pattinson said is closer to $71 million.

According to Pattinson, the trouble started when, after a 27-year relationship, Bank of America froze the company's credit lines in August 2007. The bank has since foreclosed on 11 of Barratt American's assets, Pattinson added.

"We paid a $125 million loan down to $71 million while the line was frozen," Pattinson said. "We expected [Bank of America] would unfreeze the line, but they didn't."

In June, Pattinson formed the Building Industry Coalition for Economic Recovery to promote awareness of what he saw as "bad behavior" by banks serving the home building industry. To date, there are 154 coalition members who, according to Pattinson, are "victims of contrived defaults and made to order appraisals as banks disengage themselves from residential lending and instead pursue builders for recovery and fulfillment of personal guarantees."

Barratt American is involved in the Fanita Ranch development, acting as a managing partner in Fanita Ranch L.P. The project is not involved in the bankruptcy filing, however; Guaranty Bank issued a notice of default in October, claiming it is owed approximately $27 million in principal and interest payments, according to the San Diego Union-Tribune.

Ongoing litigation has cast a shadow on the Fanita Ranch development. Said Pattinson, "Negotiations with lenders to settle the [notice of default] issue are dependent upon the resolution of litigation."

Barratt American has been a key Californian home builder for more than 25 years. In 1991, Pattinson became president and CEO of Barratt American, a wholly-owned subsidiary of U.K.-based Barratt Group. In 2004, Pattinson purchased the North American operations of the company for $165 million.