Legend Homes, the industry's 131st-largest builder in closings last year, will restructure its operations and balance sheet under protection of Chapter 11 of the U.S. Bankruptcy Code. The Portland, Ore.-based builder and its parent company, Matrix Development, filed bankruptcy on June 10 to safeguard its home building business and the land assets whose values had dropped below the value of the loans borrowed to purchase them.

In its filing with U.S. Bankruptcy Court in Oregon, Legend stated it had between 299 and 500 creditors, and between $100 million and $500 million of assets and liabilities. Its largest trade creditor is the pro dealer Parr Lumber, to which it owes $214,124.

Its largest bank creditor is Key Bank, from which Legend borrowed $22.3 million, nearly $13 million of which is secured by company assets. Other bank lenders include Bank of America ($16.2 million, of which $9.8 million in secured), and Columbia River Bank ($16.6 million, of which $11.6 million is secured).

Legend's CEO, David Oringdulph, told The Oregonian that a decline in the value of land his company purchased during boom times in Oregon, Washington, and southern California precipitated Legend's bankruptcy filing.

However, land values apparently aren't Legend's only problem, as it faces a $7.1 million construction defect lawsuit filed by the homeowners association in one of its communities in Oregon. The builder also has a $15.9 million loan with M&T Mortgage, nearly all of which is unsecured.

In a prepared statement, Legend said that it had "secured the services of specialists" to come up with a plan for continuing the company's operations while resolving its land debt. The company did not identify the names of those specialists, and BUILDER was unable reach Jim Chapman, Legend's president, at press time. Chapman is handling all press inquiries for the builder.