After a long decline, Mercedes Homes is abruptly coming to an end. The builder, its subsidiaries, and affiliates "have initiated a plan of liquidation to wind down and conclude business operations," according to a statement on the company’s website. (Multiple calls from Builder received no response.)
The wind-down is the result of failed debt-term negotiations with Strategic Value Partners LLC (also one of the owners of Hanley Wood, LLC, Builder’s parent company).
Mercedes, which has communities in North and South Carolina, Florida, and Texas, is continuing to sell completed homes but says it will not start any new projects. According to some sources, the company closed its building division on Jan. 13, 2012. Warranties will not be extended except for those issued by Bonded Builder, an unaffiliated third-party warranty provider.
Mercedes, which sold an estimated 510 homes last year according to Hanley Wood Market Intelligence (HWMI), based on deeds for new homes associated with the builder. However those closings were spread accross 12 markets throughout Texas, Florida, and the Charlotte area, with no one area registering a large number of sales. For that reason, Jonathan Smoke, executive director of research at HWMI, doubts the pull-out will significantly impact any of the affected markets. And given Mercedes’ long-fraught relationship with its debt holders, the company’s closing isn’t entirely surprising. The builder filed Chapter 11 in January 2009, during which reorganization its employees, which had held 56% of the company’s stock lost their holdings, and the Buescher family—which includes the company’s two founders and several executives—regained ownership of the entire company. It emerged from bankruptcy less than a year after filing.
Mercedes Homes of the Carolinas reentered Chapter 11 last November when negotiations with its debt holders "were on the verge of breaking down," filings stated. The case was dismissed the next month when negotiations with lenders were reinstated. However, at that time, a company official told the Charlotte Business Journal that the company was under new management.
Started in 1983, when the company sold 35 homes, Mercedes grew to 2,357 sales in 2007 when it ranked No. 30 on the Builder 100.
Claire Easley is a senior editor at Builder.