It's been roughly six weeks since Sheridan Homes filed for Chapter 11 bankruptcy, and the Plano, Texas-based builder is already back in business.
The company first filed for bankruptcy protection with the U.S. Bankruptcy Court of Eastern Texas on Aug. 4. However, court documents revealed that Judge Brenda T. Rhoades dismissed the case, effectively allowing the builder to retract its voluntary petition.
Eric Liepins, an attorney for the company, said that the builder was able to work out a deal with creditors that allowed the company to continue operating outside of bankruptcy. "They're trying to not go through bankruptcy," he said, although he noted that the company could re-file if necessary. "They're kind of in a holding pattern."
At the time of the bankruptcy filing, the company had assets that included 80 inventory homes and 100 undeveloped lots. Its secured creditors included Affiliated Bank, Bank of America, Bank of Texas, Capital One Bank, Compass Bank, Fort Worth National Bank, Guaranty Bank, RBC Bank, and Wachovia Bank.
Sheridan's president and owner Chris Matzke, a former KB Home division president, started the company roughly six years ago with the idea of filling what he saw as a hole in the Dallas and Fort Worth market by building move-up homes. The company grew quickly in the high-flying years, nearly tripling deliveries from 2004 to 2006; at its peak, the company was close to closing 300 homes a year. It even had plans to move into the San Antonio market, where it hoped to bring even higher priced product to market.
In an interview with Big Builder in 2007, Matzke described the philosophy behind his company: "What we try to offer the customer is a great design at an awesome value. ...The relationship I have with my architect is a key strength of our company. That's one place we spend money--architecture and engineering."
Texas had mostly been an entry-level buyer market, but as the housing industry heated up, opportunities opened up in the move-up market. However, as the housing market as a whole began to soften and access to mortgage credit began to tighten, the market contracted and began to target the first-time buyer pool once again. Sheridan's move-up focus started to fall out of step with the way the market was shifting.
During the earlier interview, Matzke acknowledged the growing headwinds.
"It's been a tough year, but we're still making money," he said. "And there aren't a lot of people out there making money."
And making money is the number one priority following its re-emergence from bankruptcy. The company has to generate enough cash to pay its employees and keep its banks at bay. That will mean moving fast to close both standing inventory homes, as well as the homes that were ready for delivery at the time of the bankruptcy filing but had been caught in limbo, unable to close, without court approval.
Learn more about markets featured in this article: Dallas, TX.