Maronda Homes, a Clinton Pa., homebuilder, filed for Chapter 11 bankruptcy last week citing an inability to renegotiate credit terms with its lenders.
In filings with the U.S. Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh, the company said it owes creditors as much as $100 million and has assets of as much as $500 million.
Maronda was founded in 1972 in Pennsylvania and has expanded to Ohio, Kentucky, Georgia and Florida.
Like many homebuilders, it expanded during the real estate boom and found itself with excess inventory and few prospective homebuyers when the housing market collapsed.
Until last year, the company had a $510 million, unsecured credit facility with a group of 14 banks. Its borrowing under the facility peaked at $420 million in 2007. Under this old lending agreement, it was able to reinvest proceeds from home sales back into its business and still pay down $250 million of the debt.
When that agreement expired, Maronda’s lenders would only renew the lending facility on a collateralized basis; they ordered appraisals on all of the properties in the homebuilder’s inventory, increased the interest on its borrowing by 400% and took all of the proceeds from home sales, according to court documents.
That left Maronda with no money to prepare for closings or continue working on properties under construction. The homebuilder said 13 of its 14 lenders were amenable to renegotiating the terms, but there was one holdout.
As of the filing date, it still had borrowings of $90 million under the new credit agreement.
The homebuilder owes about $86 million to its parent company, Maronda Inc.
The 20 largest unsecured creditors not affiliated with the company are all listed in court documents at as trade debts. Gexpro, an electrical parts supplier, has the largest such claim, $147,087.62.
Maronda has 102 employees, not including subcontractors, and at the time of its filing was current on all payments.
The company is being represented by the law firm Manion, McDonough & Lucas of Pittsburgh.
