Another one doesn't bite the dust. Another one does the opposite. Village Homes, a 25-year stalwart in home building in Colorado's Denver and Front Range markets, has emerged from bankruptcy as a NewCo.?with new owners but the same name.
Amid the financial and credit crisis of late 2008, Village Homes filed for bankruptcy in Denver in December, with assets of $103.9 million and debt of $138.4 million. After almost a year of negotiations, primarily with Guaranty Bank, the biggest secured creditor and agent for a four-member lending syndicate?and eventually with BBVA Compass, which assumed the Austin, Texas-based parent Guaranty Financial's deposits after the FDIC shut it down in July 2009?the new ownership venture got sign-off from the creditors to buy most of Village Homes' assets out of bankruptcy.
"We got word that we could breathe easy on the plan on Dec. 23, two days before Christmas," said Matt Osborn, president of Village Homes (NVH) and son of founder John Osborn.
The new ownership is a venture between Homebuilder Capital Solutions (an affiliate of Colorado & Santa Fe Real Estate) and Lowe Enterprises. Rather than take the old company through a reorg, the new entity purchased most of the assets of the "old" Village Homes--57 completed or partially completed homes, 506 finished lots, 444 unfinished lots, and 3.7 acres of undeveloped land out of the bankruptcy estate.
"With the already-vertical homes to finish and sell, we're a start-up, but we have revenue coming in from day one," said Osborn, who expects to move the 57 homes in various stages of completion and do another 15 to 20 deliveries on new construction in 2010. "We'll have an operating platform with capacity for about a hundred homes a year in the next couple of years."
He added that the assets were purchased well below the basis and loan value, which allows the company a much more competitive pricing for its homes, from the mid-$200s to the mid-$300s, down from prices in 2007 of low $500s to the $400s.
Osborn noted that's not what Village Homes was?it did 210 homes in 2008 and just more than 400 each in 2006 and 2007. It is, however, heartening.
"We've been seeing a few of the other stories about home builders emerging out of the ashes of bankruptcy or new companies starting up, and we understood how nice it was to get that breakthrough, so we wanted to get the word out," Osborn said.
The management team consists of key players from the "old" Village Homes operation. In addition to Matt Osborn, the brain trust includes Terry Kyger as senior vice president and CFO, Peter Benson as senior vice president of community development, Mark Osborn as vice president of asset management, Ron Hettinger as vice president of land development, Scott Sinelli as vice president of construction, Jennifer Pingrey as vice president of sales and marketing, and the elder Osborn as a consultant.
According to company press materials, "Lowe will serve as the managing operating partner with Homebuilder Capital Solutions as the primary capital source and a strategic partner.
"The NVH team will be responsible for operating the new Village Homes venture, completing and selling the inventory of 57 homes and consolidating home building operations to the five most desirable and best located village communities, including Castle Pines North (Douglas County), Granby Ranch (Granby), Observatory Village (Fort Collins), Idyllwilde (Parker), and Heathstead (Parker).
Asked whether the business plan and capital investment structure allows the management team to build back equity ownership in the company, Osborn said, "We've talked about that, but the focus now is on making this work the way it is."