Bankruptcy
Mercedes Homes filed for bankruptcy in the United States District Court for the Southern District of Florida on January 26, 2009. The home builder listed between 5,001 and 10,000 creditors, and assets between $100,001 and $500,000. Fifth Third Bank, which was owed $7.1 million, was listed as the largest unsecured creditor. 84 Lumber was owed about $615,000, and Deal Air Electrical Services is owed about $563,000.
In a statement released after bankruptcy, the home builder stated that it expected to “move quickly through the reorganization process and to emerge from its reorganization proceedings better capitalized and financially stronger.” It also said that it had "suffered from the prolonged weakness in the economies of the markets" where it does business and has suffered additional "liquidity strains" after one of its lenders was taken over by the Federal Deposit Insurance Corp.
The Mercedes Homes’ Reorganization FAQ provided some information about the impact of the bankruptcy on deposits, warranties and title:
- Customer Deposits: Mercedes Homes stated that it would place any deposits received after the filing in an escrow account with a company that is not part of the reorganization filing to ensure customer deposits do not become involved in the bankruptcy. As for deposits received before the bankruptcy filing, the home builder stated that it would be seeking court authority to maintain customer deposits under existing procedures and refund customer deposits if warranted by the terms of the Home Purchase Agreement, consistent with its normal business practices.
- Home Warranty: Mercedes Homes stated that it has contracted with a third party to provide home warranties to new home buyers, and that it would be seeking court approval to honor some warranties that were made before the filing. On October 30, 2009, the court authorized Mercedes Homes to continue to honor obligations related to Customer Programs, including warranty claims. The builder would have authorization to honor home warranties, but it would not be obligated to do so. A limitation exists in relation this authorization: Mercedes Homes would not be able to spend more than 1% of a home’s final sale price on warranty claims.
- Home Title: Mercedes Homes stated that BDR Title, responsible for clearing titles of homes, though a subsidiary of Mercedes Homes, was not included in the reorganization filing.
Read more about this topic: Mercedes Homes
Famous quotes containing the word bankruptcy:
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—Washington Irving (1783–1859)
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—Hannah Arendt (1906–1975)