Why You Shouldn't Extend Too Much Credit...of Special Interest To NJ Contractors

mahlere

http://www.app.com/assets/pdf/B344329106.PDF

Take a look at the amounts owed the trades. Not positive how a bankruptcy like this will play out. But, I can't imagine the monies being released too soon. How many companies won't be able to hold out with the amounts owed?

Bob Kovacs

WOW! I can't believe that Kara filed for BK- they're one of the biggest McMansion builders in the state!

Well, I guess if you build crap long enough, and the market starts to slow down, this is what happens........

Bob

mdshunk

It is only a chapter 11, after all. People stand a real good chance of still getting paid, they'll just have to wait a spell. That guy lists 350 million in personal property. Jeeze...

mahlere

that was my point though, I don't know how long it will take for the guys to get paid. Knock on wood, we've never been in the situation of having to go through a customer going bankrupt. I know a couple of these companies, the amounts owed are about 1/3-1/2 their annual revenue. That's at lot of money to be waiting on.

rws

I hope this is not a repeat of october 1987 happening.

mahlere

A little update. Might be chapter 11, but some people won't make it out of this unscathed....
Link to Article

So, high volume and low margins to begin with. How many companies won't cover costs after this deal is done?


TRENTON — A Pennsylvania masonry company that did $2 million worth of work for Kara Homes cannot pursue a lien to collect its debt, at least for now, a bankruptcy judge ruled today.

A-1 Bracket Inc., the largest of Kara's unsecured creditors, did work at 12 different Kara projects. It filed applications for liens on Oct. 6, one day after Kara Homes filed for protection from its creditors under a Chapter 11 bankruptcy reorganization. Without the liens, A-1 Bracket is considered an unsecured creditor, making it unlikely that the company will collect its debt in full.

A state law gives the company 90 days to go through the process of obtaining the liens, but Kara's bankruptcy raised questions about whether the liens could be pursued. Under bankruptcy law, all actions to collect debts are generally frozen to give debtors time to reorganize their business.

In a hearing today, U.S. Bankruptcy Judge Michael B. Kaplan denied A-1's request to pursue the liens, but said he would reconsider A-1's request in the future.

Based in East Brunswick, Kara is one of the state's largest home builders, with many of its developments in Monmouth and Ocean counties.