Mercedes Homes and a number of its subsidiaries filed for Chapter 11 bankruptcy protection from creditors on Monday Jan. 26.
The Melbourne Fla.-based private builder listed its assets at between $100,001 and $500,000 and its liabilities in the same range. It noted in the filing that it expects to have funds available for unsecured creditors, the largest of which is Fifth Third Bank, which is owed $7,149,402.97 according to the filing. The remaining companies on the list of largest creditors were materials and services suppliers, with 84 Lumber owed the most at almost $615,000.
In the filing, Mercedes requested that the court consider its bankruptcy and that of its subsidiaries as one case. They include Space Coast Truss, Mercedes Homes of Texas Holding, Suntree Office Complex, Engineering and Drafting Services, Mercedes Homes of the Carolinas, MHI Holding Company, Mercedes homes of Texas LTD, MHI Building Products, Solid Wall Systems, and Dairy Towns Community Developers.
It also asks the court's permission to hire a handful of consultants to help the company reorganize. Odyssey Capital Group is being asked to help value the company. Alvarez & Marsal North America is proposed as the chief restructuring advisor, and Michael P. Kahn Associates is suggested as a special advisor to help the company raise financing. Richard M. Williamson, a managing director with Alvarez & Marsal and co-head of the firm's West Region, is proposed as chief restructuring officer.
Mercedes, which builds in Florida, Texas, and North and South Carolina, has built more than 40,000 homes since its start in 1983. That year the company, founded by Howard Buescher and his daughter Susah Girard, built 35 homes.
By 2007, Mercedes was ranked #30 on the 2007 Builder 100 with 2,357 closings (down 45% from 2006) and $724 million in revenue (down 44% from 2006). Out of the private builders on the BB private report card, Mercedes ranked #12 in gross revenues and #13 in unit closings. The company projected $560 million in revenue and 1,900 in closings in 2008.
Buescher's other children followed him into the business. Now there are five involved. But the company itself is owned by its employees. Its ESOP program was suspended Monday with the filing, the documents said.
Rumors about the company's financial situation have been circulating for months. Its elaborate headquarters building in Melbourne, built at the peak of the market, has been for sale for some time.
Separately, Mark Zandi at Moody's Economy.com is out with a new proprietary, for-profit study of the housing market that conclues that prices will stabilize by the end of 2009 and that the Case-Shiller Indices will decline another 12% during the year to end 2009 with a total peak-to-trough decline of 30%.