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Lafferty Homes - California Home Builder




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Mercury News wire reports that San Ramon, California-based Lafferty Homes has fild for Chapter 7 bankruptcy protection. According to the article:

The company listed debt of $100 million to $500 million and assets of $10 million to $50 million, according to its filing yesterday in U.S. Bankruptcy Court in Oakland.

Lafferty filed under Chapter 7 of the bankruptcy code, under which a court-appointed trustee sells off assets and winds down a company's operations.

Further to the article, the company's founder Richard Lafferty also declared personal bankruptcy.

The Lafferty Homes website ( lists communities under development across California, including Oakdale, Palmdale and Lancaster.

We have been unable to find out more as to the size of Lafferty at peak. If you have any information regarding their peak building or employee levels, or can provide us with additional details regarding the specific circumstances surrounding Lafferty's implosion, please let us know.

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Baron at 15:54 2008-07-27 said:
I witnessed the management of Lafferty for two years during the "good times" what a disaster, going into the Central Valley at the peak of the market , the use of expensive mezz debt, the lack of financial controls within the company,a staff was untrained and an owner who had no Business being in production . It would be easy to point that they were a victim of the market but I disagree they were a victim of a lack of control and basic fundamentals. My insight working with this group caused me to change my entire strategy just in the nick of time. Lafferty at its peak generated about $ 130,000,000 per year while producing approximately 200 units sold per year (2005) Company was based out of San Ramon where it focused much its strategy within a 50 mile radius, then the eventual purchase/commitment of 2000 +/- lots in the Fresno market (most of which were commited to in 2004-2005) where they had no experience killed them. Company was run by an owner who had grander designs for the future but had issues focusing in on the present, staff had little or no direction, CFO was way in over her head and their methodolgy at examining deals was virtually non existant. I was blown away at how easy it was for them to attract investors,Banks,Equity with all of the convulted information that they provided. At the end I saw that deals were generated to produce the upfront management fees rather than longterm profit, once the management fees were tapped out what incentive did the builder have. Investors were not savvy enough to understand that the higher the projected revenue the higher the management fee, it paid to fluff up the numbers. There were plenty of lessons on how not to operate a business in this debacle Permalink

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Important: This company is on our list of builder operations that have "imploded" (see also ailing lenders). This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid declines in enterprise value; or abnormal "bail-out" by corporate parents or peers in order to continue to operate. The builders may be residential or commercial.