Regency Cos., Iowa's largest home builder, has completely siezed up and the situation looks terminal. From the Des Moines Register:
Regency Cos. of Des Moines, has laid off the entire staff of its home building business and left behind 300 homes that lenders and buyers will now have to sell or finish.
Jamie Myers, president of Regency, told 103 people working at Regency Homes offices in West Des Moines and Cedar Rapids on Friday afternoon that their jobs had been eliminated and that construction would halt. Myers said it became impossible for the company to continue after a lending agreement with Wells Fargo & Co. ended in December without a renewal.
"We don't have the cash flow to pay them," he said of employees.
Myers said it's hoped that enough money will be generated from the sale of homes already built to pay lenders and contractors.
Myers didn't rule out a bankruptcy for the company, which concentrates in the Ames, Cedar Falls, Cedar Rapids, Des Moines and Iowa City areas.
We are considering this an implosion due to the layoffs and cessation of business, as well as strong possibility of bankruptcy.
As far as the size of the company and scale of the atrophy:
Regency closed the sale of 958 homes in 2005, its best year But the company has struggled for months, and predicted in January that sales would fall to 550 homes this year.
Regency laid off 27 people at the start of the year and hired an executive to help restructure the company. In the previous two years, the company had used attrition to cut its home-building staff by 40 people.
Meanwhile, James and Robert Myers face several million dollars in court judgments, Regency properties are slowly being awarded to banks and their mother has mortgaged two homes to a company that holds delinquent construction bonds.
Upcoming court hearings could determine whether lenders get the deeds to what is left of the 345-acre Michael's Landing planned community, a project named after the late Michael Myers, Regency's co-founder.
James Myers filed for personal Chapter 7 bankruptcy protection on Tuesday in the US Bankruptcy Court for Southern Iowa. He is claiming a little over $1 million in assets and over $183 million in debts. 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.