Neumann Homes Declares Chapter 11 Bankruptcy – Existing Homes Will Be Built
Nuemann Homes, one of the largest homebuilders in the Midwest and Denver has declared bankruptcy. The company has been building in some of the worst markets in the country including Detroit and Denver so this can not be big surprise to anyone.
In fact, Nuemann probably gets what it deserved. They acquired Tadian Homes in 2005 at the peak of the housing boom. Normally this could be excused, but Tadian builds in Detroit which was (and is) mired in a housing collapse of epic proportions. And whomever sold the idea, “Hey, the auto industry is laying off hundreds of thousands, lets go grab a bunch of market share in Detroit” should both be shot and hired at the same time. Shot because their business sense is so wrong, but hired because they must be a heck of a salesman.
Add to that being a major player in Denver which is another city hard hit by the housing slowdown you have the recipe for disaster.
Neumann said it will file for Chapter 11 bankruptcy and that its lenders have agreed to provide limited additional funding so that its assets can be evaluated and sold. It also said the earnest money of customers whose new homes haven’t started construction is safe in escrow. Neumann said it will ask a bankruptcy judge to approve refunds from those accounts…
“The market downturn in the Chicago and Denver housing markets [is] now in excess of 50 percent, with home prices dropping from 10 percent to 25 percent in some sub-markets,” Kenneth Neumann commented in the fax. “Even after the significant help we have received from our lenders this year, the company can no longer weather this storm.” via CHICAGO SUN-TIMES
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Comment by Sundream Estate on 25 October 2007:
Nuemann said that they 2005 invest in the Detroit market, a move that cost them more than $60 million. Well, did they don’t have that money to invest, when they decide to invest in Chicago and Detroit?
Comment by Concerned Owner on 27 October 2007:
As a Neumann Home owner my wife and I are very concerned about this situation. We are four months into our new home and have an eight month balance remaining on our one year warranty. We don’t have any major issues right now, but what protection do we have going forward. Many of my neighbors have been issued a notice of lien from subcontractors not yet paid by Neumann. There are many unanswered questions. My family and I have access to legal representation and advice. As a Neumann Home owner maybe you do or don’t have legal concerns. If you do, research what my family and I have benefited from by visiting http://www.prepaidlegal.com/hub/robbyschopen As a Neumann Home community we have met and any information we get we are posting on Chicory_Creek_53177@yahoogroups.com
Concerned Owner
Pingback by Buyers Making Tracks to Public Transit | Redfin Chicago Sweet Digs on 25 June 2008:
[...] areas where a car is absolutely essential to get to work and play. As evidenced, in part, by the Neumann Homes collapse, new buyers may not be as eager to invest in homes as far away as Oswego and [...]