The Home Builder Implode-O-Meter News Pick-ups: Imploded: Rhodes Design and Development

Rhodes Design and Development - Las Vegas developer and home builder

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2009-04-01

The Las Vegas Review Journal has has reported that James Rhodes ahs filed for Chapter 11 bankruptcy protection "on behalf of many of his key businesses, including Rhodes Design and Development Corp." The petition lists a wide range of assets and liabilities — anywhere from $100 to $500 million. Over the years, it seems that Rhodes was involved in a good deal of conflict. Further to the article:

Rhodes has been one of Las Vegas' most successful and controversial developers and homebuilders. He developed Rhodes Ranch in southwest Las Vegas and Tuscany Village in Henderson. He provoked the ire of environmentalists with his development of the Red Rock Country Club community.

Rhodes drew news coverage again when Erin Kenny, the former Clark County commissioner, disclosed that Rhodes paid her $200,000 a year for consulting as part of an agreement in which she pleaded guilty to federal corruption charges. Kenny was sentenced to 30 months in prison in connection with a bribery case involving former strip club owner Michael Galardi.

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The Arizona panel also grilled Rhodes over $148,000 in fines he paid after admitting he illegally funneled campaign contributions in 2002 through employees and employees' spouses to Sen. Harry Reid, and then County Commissioner Dario Herrera. Herrera also was convicted in connection with the bribery case.

The Rhodes Companies filed the bankruptcy petition but an attachment notes that 31 affiliated companies also are seeking protection under Chapter 11 bankruptcy.

We are classifying the Rhodes bankruptcies collectively as a full-scale "implosion" based on the cited assets and liabilities. However, we've yet to determine the relative size of Rhodes' business at peak. If you can provide information regarding peak closings, developments, or employees, please comment below or email us.

Comments:

rylandcruncher at 07:34 2009-04-03 said:

In 2005, Rhodes Homes closed approximately 600 homes and recorded $285M in revenue. The following year, at the peak of the Vegas market, revenue exceeded $300M on more than 600 closings. Undoubtedly these results made Rhodes the largest privately-held builder in the Vegas area. This company had great locations, but had to be one of the worst managed companies in the homebuilding industry. Somehow, Jim Rhodes managed to obtain financing much needed financing thru a $500M publicly traded facility, underwritten by Credit Suisse. If not for this infusion of cash, this bankruptcy would have occurred two years ago. Frankly, it's shocking that they lasted as long as they did. RIP! 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.