The ongoing housing slump claimed another victim this week when Southern Building Products, the largest producer of floor and roof trusses in Florida, filed for protection from its creditors under Chapter 11 of the U.S., Bankruptcy Code on March 18.
In its voluntary petition filed with the bankruptcy court in Florida's Southern District, West Palm Beach-based Southern Building Products said it had total assets of $11,568,000. It did not specify the amount of its liabilities, although it identified $6,587,291 in secured debt owed to lenders that hold liens against its equipment or property. Southern also identified $1,785,944 in unsecured debt, with its largest unsecured creditors being American Express, which has two claims for $72,934 and $41,886; and Bank of America, with three claims for $19,000, $20,000 and $20,039. Among the building material suppliers that are creditors in this proceeding are Simpson Strong-Tie, West Fraser Timber, Great South Timber & Lumber, Central Forest Products, and Rafter King Lumber.
Southern Building Products states in its petition that it was forced to seek bankruptcy protection by actions of its largest secured creditor, Bank Atlantic, which is owed $5,826,579, and which holds a first mortgage on Southern's property. Late last year, the bank over-advanced Southern $800,000 on its line of credit. In an effort to work out this debt, Bank Atlantic offered to lift its liens against Southern's equipment-which would allow Southern to seek new financing, using that equipment as collateral-if the supplier put its accounts receivables in an untouchable "lock box." Southern agreed, but because it only did so orally, Bank Atlantic wouldn't release the liens, froze Southern's line of credit, and "swept" the lock box of its assets.
However, Southern, which is co-owned by John and Elaine Byers, also attributes its current predicament to the decline in the state's home building activity and Southern's ill-advised expansion of its distribution throughout Florida, instead of confining that distribution to markets nearest to its manufacturing plants, which also make stairs and wall panels. It currently employs 74 people, after having cut its workforce by two thirds. The company has also closed its plant in Fort Myers, Fla., and confined its plant in Auburndale, Fla., to making wall panels and stairs. Southern stated that its $11.6 million in revenue for 2007 was about one-third what it generated two years earlier. The company owes $87,800 in sales taxes and $17,110 in property taxes.
At a hearing scheduled for March 21, Southern will petition the bankruptcy court to allow it to pay its pre-petition payroll and to use its cash collateral, valued at $1,310,693, to keep its operations going. The company will also petition the court to approve debtor-in-possession financing, although its Chapter 11 filing did not identify any new sources of capital.
BUILDER was unable to reach either John Byers or Jimmy Parrish, his attorney, at press time for comment about the bankruptcy filing or Southern's plans for reorganizing under Chapter 11.