Since I've already told the story of builder bankruptcies from the side of the homebuilders, I thought I should also do the same from the POV of the lender, in this case KeyBank. From a BuilderOnline.com story:
KeyBank has sued Legend Homes' CEO David Oringdulph to try to recover $32.5 million in troubled loans that the homebuilder and its affiliated companies owe the bank.
Cleveland-based KeyBank sued Oringdulph and his trust on Sept. 18 in Multnomah County Circuit Court. Like most homebuilders, Oringdulph personally guaranteed he would repay the debts from KeyBank's seven loans.
With the guarantee, lenders can sometimes force builders to repay debts from their personal assets, including homes and personal bank accounts.
Oringdulph said he expected the suit after his company -- one of Oregon's largest homebuilders -- filed Chapter 11 bankruptcy in June. "I've taken steps to protect myself," he said. "My personal assets are limited and not in jeopardy."
KeyBank is Legend Homes' largest creditor and has pushed hard to recover its money...
The bank lent Legend or its affiliated companies millions of dollars to buy land for home lots, then land values plummeted in the housing slowdown...
KeyBank reappraised the land value and asked the company to pay back $7.7 million to meet its loan-to-value ratio, which was not disclosed in the lawsuit. The company could not make the payment and defaulted on the loan. That loan carries a $9.7 million balance, according to the suit.
KeyBank also started to foreclose on the property, company officials said.
Earlier this month, Legend Homes won court approval to restart home construction on some subdivisions, and executives hope to re-emerge from Chapter 11 next year.
Of course no one forced the builder to sign a personal guarantee...
No comments:
Post a Comment