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M.W. Johnson Construction Inc. - Home builder

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2008-06-18

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stories: wsj.com, finance-commerce.com

Florida, Minnesota and Wisconsin home builder M.W. Johnson Construction Inc. (mwjohnson.com) filed for Chapter 11 bankruptcy protection on June 13th according to an article from the WSJ. Per the article:

M.W. Johnson blamed its bankruptcy on the "troubled credit markets and overbuilding" that have caused sales of new homes to decline. The home builder said that not only have these economic conditions forced it into bankruptcy, but they have drained the company of cash. M.W. Johnson is seeking court approval of a $1 million bankruptcy loan to help it liquidate its assets.

...

M.W. Johnson, of Lakeville, Minn., reported assets and debts in the range of $50 million to $100 million in its bankruptcy petition and said it has between 200 and 999 creditors. The home builder's affiliate, M.W. Johnson Construction of Florida Inc., also filed for bankruptcy.

According to their website, M.W. Johnson had been doing business for 37 years. Further to an article from Finance and Commerce, M.W. Johnson hopes to reorganize:

MW Johnson, which cracked the top 10 list of Minnesota homebuilders in 2006 as measured by gross revenue, plans to keep its Minnesota and Florida operations open while it restructures to meet operating expenses.

The article goes on to note that in 2006, M.W. Johnson closed on over 400 housing units.

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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.