Public HomeBuilders HOSED!!!!!
From the WSJ:
Two more home builders have filed for Chapter 11 bankruptcy protection in the face of declining home sales and troubled credit markets.
Oakridge Homes LLC in California and M.W. Johnson Construction Inc., which builds homes in Minnesota, Wisconsin and Florida, both sought Chapter 11 protection Friday. The companies are two of many home builders in bankruptcy proceedings, including Levitt and Sons LLC and Tousa Inc.
M.W. Johnson, of Lakeville, Minn., reported assets and debts in the range of $50 million to $100 million in its bankruptcy petition and said it has between 200 and 999 creditors. The home builder's affiliate, M.W. Johnson Construction of Florida Inc., also filed for bankruptcy.
Oakridge Homes didn't state in court papers whether it intends to reorganize or liquidate its assets during its stay in Chapter 11. An attorney for the company didn't return a call seeking comment by Tuesday afternoon. Oakridge, of Valencia, Calif., listed assets and debts in the range of $10 million to $50 million in its bankruptcy petition.
Some idiots think that the BKs of private HBs is going to help public HBs...allow them to get market share. This is one of the most silly things I have heard in a long long time. By going Chapter 11, the private gets to restructure and right size its organization if it so chooses. It gets to operate under the protection of BK giving it a competitive advantage cherrypicking while the umbrella remains overhead.
If it liquidates, astute investors get to pick up the assets at pennies on the dollar and shove it down the arrogant Public HB's throat with a much lower cost base and without the burden of billions in debt and BS overhead to contend with. Now that the private HB BK's have started, expect the publics to start evaporating into extinction or reorganizing until they too have purged themselves of the years of accumulated excess land and debt.
My guess is that now that the privates have started down the BK path, the publics are now soon to follow because no one likes to be playing with hundred pound weights on your ankles.
Too much debt and too much land, nothing a BK judge can't get rid of and off to a fresh start we go.