Kara Homes founder and CEO Zuhdi Karagjozi has filed in bankruptcy court a strongly worded objection to a new reorganization plan that would oust him and place the company in the hands of Fishman Real Estate Holdings and Plainfield Specialty Holdings.

In the court filing, Karagjozi took direct aim at chief restructuring officer Perry Mandarino. "Mandarino has misrepresented his position to this court and has manipulated these cases to enrich himself and his associates at the expense of the unsecured creditors and me," Karagjozi said in the court documents. "He discouraged prospective funder and plan proponents that I brought to the table and is trying to ram through the plan which benefits his associates, Fishman Real Estate Enterprises, owned by Glen Fishman, and Plainfield Specialty Holdings II, despite the fact this plan constitutes a rape of the debtors assets."

Karagjozi accused Mandarino of steering the company to Plainfield and Fishman, despite Karagjozi's claim that he had already lined up builders that could pay higher dividends to unsecured creditors. He also alleged Mandarino has a history directing assets to Fishman but selling them for a fraction of their value. Mandarino denies the charges.

Owing nearly $300 million to more than 1,000 creditors, Kara filed for bankruptcy in October 2006. The June reorganization plan calls for Maplewood Homebuilders, a firm formed by Plainfield Specialty Holdings and Fishman, to provide a $10 million equity investment into Kara, which buys Maplewood 100% direct ownership, effectively terminating the Kara brand. Bankruptcy judge Michael B. Kaplan approved the plan and it has been sent to Kara's creditors for approval.

James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers, said he was not surprised Kara's founder was dismissed. "Unfortunately, he's somewhat tainted from the excess that went on [at Kara]," Hughes said. "Any effort at borrowing to complete some of the projects will require totally new leadership."

Fishman has built a reputation in the Garden State as managing partner in Asbury Partners, which has been active in redevelopment in Asbury Park, N.J. "Fishman has a reputation for taking distressed properties and turning them around," Hughes said.

Plainfield provided Kara with $7 million for operations during bankruptcy, will put up $10 million in equity, has committed a revolving loan of $26 million for construction, and is buying $25 million of debt in three developments, according to the Newark Star-Ledger and court papers. Under the reorganization plan, it will pay unsecured creditors an initial dividend of $2.25 million.

Plainfield's money will help develop the 471 homes (129 are under contract) in the 11 developments in which Kara is building. The company owned 30 developments when it filed for bankruptcy. However, it already has sold off some assets and may have to sell others. To complete the remaining jobs, the company is estimated to need another $115 million.