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Orleans Builders - Northeast-based residential

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2010-02-02

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stories: philly.com, marketwatch.com, reuters.com, beforeitsnews.com

In a sign that the distress in the housing market and the economy is far from over, Bensalem, Pennsylvania-based Orleans builders has filed for chapter 11 bankruptcy protection. They list $440 million in assets and liabilities of $498.8 million, including, interestingly, $93 million owed to collateralized debt obligations (CDOs).

Orleans will continue operating in bankruptcy, and plans to seek a buyer.

Based in the northeast, Orleans operated in 8 states. It focused on move-up rather than entry-level housing.

Orleans' 17-member bank creditor consortium finally stopped extending the terms on their debt, leading to the filing.

At the peak of the market in 2006, Orleans was ranked #42 by Builder magazine, with just over 2,000 closings.

Philly.com reports that Orleans' work force has shrunk to about 300, down from around 990 at the 2006 peak.

In light of what has just happened to Orleans, we can't help but wonder if banks have finally had enough, and are moving from the "denial" to "acceptance" phase regarding their real estate developer debtors. If that is the case, get ready for more "implosions" in the near future. However, they are likely to be of the financial bankruptcy type, rather than sudden shutdowns of operations.

The CDO thing is particularly intriguing. How much junky builder debt is out there in opaque CDOs (watched by few and off balance sheet, in most cases), waiting to be foreclosed?

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Comments:

lblackhurst at 12:29 2010-04-01 said:
These people screwed me out of $10,000. Glad to see them go down. Permalink
Citizen76 at 17:06 2010-04-09 said:
They got me for $23,000, but I met a concrete guy they stuck for over $100K. The way they paid made it tricky to know when to cut them off and made it impossible to avoid losing something. They did not put us out of business, but they did take some guys out for sure. :evil: 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.