This Wednesday, Anderson Homes, the Raleigh, N.C.-based builder that’s been under bankruptcy court protection since March 16, 2009, is scheduled to officially close its doors. June 30 is the effective date when Anderson Homes and a sister company also in Chapter 11, Vanguard Homes, convert their court proceedings to Chapter 7 liquidations.
Earlier this year, Dave Servoss, the company’s 68-year-old president and chairman, was cautiously optimistic about the chances of Anderson Homes becoming one of the few builders to emerge from bankruptcy as an operating entity.
However, he told BUILDER on Monday that his decision to sell off what’s left of his 30-year-old business, instead of continuing its reorganization, was the result “of a combination of factors,” including his concern over mounting bankruptcy-related fees that would have only gotten worse the longer Anderson Homes stayed in Chapter 11.
Servoss also noted that market conditions were not improving fast enough to rescue his businesses. Through June of this year, Anderson had sold around 40 homes. But most of those sales “were at little or no margin,” said Servoss. “It was an exercise in futility.”
Over the last year, Servoss has been selling off the company’s assets, which included about 400 lots and 120 spec homes throughout North Carolina’s Triangle region. He said that seven lenders with $18.9 million in secured claims against Anderson Homes and Vanguard Homes “have pretty much been made whole.” (Servoss personally guaranteed his company’s bank debt.) Court filings also show roughly $6.5 million in unsecured claims against the two home building companies. Those claims will be reduced as remaining assets are sold. These include 38 lots, seven townhouses, one single-family home, offices, and equipment.
Servoss, who has two children in college, said he intends to keep working. “I’m going to do something, for my mental well-being as well as financially.” Consulting is a possibility, and he said he’s been approached about starting a new home building business.
Whether he’s looking forward to dealing again with what’s happening in today’s market is another matter. “The long-term prospects for housing are good," Servoss said. "But the short-term problem is developing a business model that makes sense from a profitability point of view because right now, the vast majority of buyers out there want price only. The quality buyers are still waiting for the other shoe to drop.”
John Caulfield is senior editor for BUILDER magazine.