Wednesday, December 3, 2008

Kimball Hill Banruptcy - Homebuilder is Winding Down Operations

Kimball Hill Homes, an institution in the Northwest suburbs for 55 years, will be going out of business, the company announced Tuesday. Chapter 11 bankruptcy did not help the Chichago homebuilder and they are done.

"Over the next 15 moths, we will be phasing down operations, said Ken Love, chief executive officer, in a telephone interview.

Within six months, the company will finish the approximately 500 homes it has under construction and under contract, including about 110 in the Chicago area, he said. The 120 deposits that buyers have placed on homes that have not yet been started will be returned. That includes about 40 in the Chicago area.

No homes will be started, but approximately 260 inventory and model homes will be available for purchase.

Of 400 Kimball Hill employees, 100 are in the Chicago area, Love said. Some were notified of their termination Tuesday, others will stay with the company for all or part of the wind-down period.

"We deeply regret the necessity of today's decision, but given the current housing and financial market conditions, we are simply unable to conduct normal operations while the company continues its sale efforts," Love said in a statement.
Beginning the wind-down process now ensures the smoothest transition possible for employees, home buyers, creditors and the communities where the company builds, he said.
If the company is not sold within 60 days, the opportunity for a sale will diminish, according to Love. A single buyer is preferred.

The homebuilder filed for Chapter 11 bankruptcy protection in April due to lower demand for homes during one of the worst housing markets in decades.

A year ago, the company listed assets of $795.5 million and a debt of $631.9 million, but that was the amount paid for the assets, and their current market value is not really known, Love said.
The company also said has requested a hearing on Jan. 12 to approve the disclosure statement accompanying its Chapter 11 plan.

Besides proceeds from home sales, the company has access to more than $35 million from loans obtained during the bankruptcy process.

This will ensure that employees, subcontractors and tradespeople will be paid for their work, he said. The people who will lose money include lenders and shareholders, he said.
Kimball Hill Homes is believed to have built more than 10,000 homes in the Chicago area. Most recent building has been in Bartlett, Elgin, Naperville, McHenry, Montgomery, Shorewood and Yorkville.

A predecessor to this company was started by a lawyer named Kimball Hill, who is considered founder of Rolling Meadows because his company built almost 4,000 homes there in three years beginning in 1953. His son, David Hill, who died July 26, took over leadership of the company in 1969 and later expanded into nine states and 15 metropolitan areas.

During the current housing slump, the company quit building in Florida, Ohio, Oregon and Wisconsin. It continued operating in Illinois, Nevada, Texas and California

No comments: