Faced with a lawsuit from an aggressive creditor, Dunmore Homes filed for bankruptcy protection under the Chapter 11 laws late last week.

Sacramento-based Dunmore, which is now roughly one-fourth the size from its 2003 peak of 835 closings, stopped building in August.

"This was an action we did not want to take, but the success of our restructuring progress must remain the primary focus of the company in order to protect the best interests of our contractors, employees, homeowners, and business partners," said local businessman Michael Kane, who purchased Dunmore Homes in September.

John Slaughter, Dunmore's vice president of construction and operations and a company spokesperson, would not identify the company that filed the lawsuit against Dunmore. However, he did say the home builder hopes to start building again during the first quarter of 2008.

"Filing for bankruptcy protection was simply a way to keep everything level and fair to everyone, including the banks and our subcontractors," he said.