Builder believes troubled times may soon end

Bulldozers at Neumann Homes projects went silent this week. Hammers slid back into carpenter belts. Sales people went home.

As Neumann Homes confirmed it will file for Chapter 11 bankruptcy protection this week, all building activity stopped at projects in Antioch, North Aurora, Gilberts, Grayslake, Hanover Park, Lakemoor and Wonder Lake.

In an interview Tuesday, owner Kenneth Neumann, citing his faith, customers and optimism, said he hopes he can turn around one of the area's largest homebuilders.

"My wife (Jean) and I have known for a long time we are carried by the Lord," Neumann said. "It's like the footprints in the sand. We enjoy the peace and comfort of being cared for by the Lord each day."

Although quoted previously as being pessimistic about the overall housing market, he was optimistic Tuesday.

More Coverage Experts advise Neumann buyers Builder had large presence in Antioch Bankruptcy puts homeowners' futures in doubt

"I suggest we have a very high probability of success," he said. "More than a few of our former employees are willing to come back."

Consistently one of the top six area builders, Neumann Homes sent letters in the mail Tuesday informing customers of its financial condition, he said.

Neumann said he will ask a bankruptcy judge to immediately refund escrowed deposits for customers with homes not yet under way. He estimates that amounts to about 130 homes.

Another 130 to 135 homeowners will be notified their homes under construction no longer are being built. Another 132 homes have been sold "on-spec" but are not finished.

Customers with unfinished work must wait for the bankruptcy proceedings to go through the courts, or the possibility that their housing community sells to another developer, Neumann said.

"There are still a lot of unknowns and people will have to be patient," Neumann said. "In the coming days or weeks there's not a lot people can do #8230; We'll get back to them."

Founded in 1985, the family-owned business reached its pinnacle in 2005, building more than 2,000 homes in the Chicago area alone. It operated in Colorado, Illinois, Michigan and Wisconsin.

It was the 2005 purchase of Detroit-based Tadian Homes that Neumann points to as one of the reasons for his downfall. Neumann Homes lost $60 million before selling the Detroit operations.

The housing market nationwide this year has suffered drops in demand and prices. The situation has been made worse by rising numbers of foreclosures and a tightening credit market.

Last year, Neumann Homes closings fell 29 percent, to 1,378. Gross revenue fell 18 percent, to $425 million, according to BuilderOnline, an online trade site.

This month the builder laid-off 110 employees, leaving about 20 to run skeleton operations.

Building homes from $170,000 to $370,000, its housing inventory swelled to 5,485 single and multi-family homes in the second quarter, according to Schaumburg-based Tracy Cross Associates, a real estate research firm. Less than half of those have sold, and the company could expect a five-year period before they all get sold, according to industry estimates.

Neumann said he isn't sure how he will pull his company out of bankruptcy or personally handle the strain of bankruptcy, which can take months or years.

But he has faith.

"I know the greatest days are ahead," he said.