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
Showing posts with label Kimbal Hill bankruptcy. Show all posts
Showing posts with label Kimbal Hill bankruptcy. Show all posts
Wednesday, December 3, 2008
Thursday, October 9, 2008
Kimball Hill - Bankrupt Homebuilder Update - Chapter 11 Homebuilders
Bankrupt homebuilder Kimball Hill Inc., is poised to decide by late November whether it will accept an equity buyout or provide a recovery plan to pay off creditors, just as the global financial crisis grips the credit markets.
About five companies, including equity investors and other home builders, have made overtures to buy all or part of the Rolling Meadows-based company, Chief Executive Officer Kenneth Love said Wednesday during an interview. He declined to name the suitors.
"Our ultimate goal is to exit Chapter 11," said Love. "But at the same time, we recognize that we have responsibilities. ... We have not rejected any possible scenarios."
The homebuilder filed for Chapter 11 bankruptcy protection in April due to lower demand for homes and during one of the country's worst housing markets in decades. Kimball Hill sold 1,800 homes from October 2007 through Sept. 30, compared to 3,200 for the same period the year before. It listed assets of $795.5 million and debt of $631.9 million as of last Dec. 31.
This has been one of the worst housing markets in decades, but don't count builders out just yet, said Alan Lev, president of the Home Builders Association of Greater Chicago, based in Addison.
"Sales have been slower than a few years ago, but we're still selling product, just less of it," said Lev. "We're all tied together to the financial crisis, your 401(k), the economy, the credit companies, the real estate and home building markets."
That slump has led Kimball Hill to reduce its workforce from 1,100 to 400 and to exit markets in Florida, Ohio, Oregon and Wisconsin. It continues doing business in Illinois, Nevada, Texas and California.
Since the bankruptcy filing, the company has asked the court for two extensions to prepare its recovery plan. The extensions were necessary to continue discussions with creditors on a plan that would be successful, said Love. He was hired in 2005 by the founder's son and longtime leader, David Hill, who died of cancer in July.
"We're looking at all possibilities, and it will be a matter of weeks, not months, when we'll have our restructuring plan in place," Love said.
Kimball Hill's greatest challenge now is the financial crisis that has gripped the markets worldwide. Credit markets have dried up, and with them, some opportunities to quickly resolve Kimball Hill's woes, he said.
"The credit crisis may be a challenge for all companies, even those that are not in Chapter 11," Love said.
The CEO said he is committed to helping Kimball Hill until the plan is filed and approved in court. After that, Love is unsure of his future.
"I've committed to the board and the banks that I'm here to see us through to the best outcome," Love said. "Up to the point when the reorganization is confirmed (in court), I'll be here. After that, I'm not sure what I'll choose to do."
Love also remains optimistic about the housing market, believing it will have a modest upturn next year and down the road.
"Three to five years from now, the housing market will look dramatically different from it does today," Love said.
About five companies, including equity investors and other home builders, have made overtures to buy all or part of the Rolling Meadows-based company, Chief Executive Officer Kenneth Love said Wednesday during an interview. He declined to name the suitors.
"Our ultimate goal is to exit Chapter 11," said Love. "But at the same time, we recognize that we have responsibilities. ... We have not rejected any possible scenarios."
The homebuilder filed for Chapter 11 bankruptcy protection in April due to lower demand for homes and during one of the country's worst housing markets in decades. Kimball Hill sold 1,800 homes from October 2007 through Sept. 30, compared to 3,200 for the same period the year before. It listed assets of $795.5 million and debt of $631.9 million as of last Dec. 31.
This has been one of the worst housing markets in decades, but don't count builders out just yet, said Alan Lev, president of the Home Builders Association of Greater Chicago, based in Addison.
"Sales have been slower than a few years ago, but we're still selling product, just less of it," said Lev. "We're all tied together to the financial crisis, your 401(k), the economy, the credit companies, the real estate and home building markets."
That slump has led Kimball Hill to reduce its workforce from 1,100 to 400 and to exit markets in Florida, Ohio, Oregon and Wisconsin. It continues doing business in Illinois, Nevada, Texas and California.
Since the bankruptcy filing, the company has asked the court for two extensions to prepare its recovery plan. The extensions were necessary to continue discussions with creditors on a plan that would be successful, said Love. He was hired in 2005 by the founder's son and longtime leader, David Hill, who died of cancer in July.
"We're looking at all possibilities, and it will be a matter of weeks, not months, when we'll have our restructuring plan in place," Love said.
Kimball Hill's greatest challenge now is the financial crisis that has gripped the markets worldwide. Credit markets have dried up, and with them, some opportunities to quickly resolve Kimball Hill's woes, he said.
"The credit crisis may be a challenge for all companies, even those that are not in Chapter 11," Love said.
The CEO said he is committed to helping Kimball Hill until the plan is filed and approved in court. After that, Love is unsure of his future.
"I've committed to the board and the banks that I'm here to see us through to the best outcome," Love said. "Up to the point when the reorganization is confirmed (in court), I'll be here. After that, I'm not sure what I'll choose to do."
Love also remains optimistic about the housing market, believing it will have a modest upturn next year and down the road.
"Three to five years from now, the housing market will look dramatically different from it does today," Love said.
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