Kirk CEO: We will give refunds to homebuyers

The chief executive of bankrupt Kirk Homes vowed Wednesday to return earnest money in full to waiting homebuyers, continue to close on ready homes and keep the company's doors open.

But the next two weeks will be crucial as the longtime homebuilder faces lenders eager to liquidate.

A hearing has been scheduled for Oct. 6 at the U.S. Bankruptcy Court to determine the Streamwood company's fate.

"I have continued to talk directly with lenders to figure out the best course of action," Kirk CEO John Carroll told the Daily Herald in a telephone interview.

Parent company The Kirk Corp. had been one of the suburbs' largest regional homebuilders since 1978 and had more than 50 neighborhoods throughout Chicago and the suburbs. Its most recent developments were in Lakemoor, Hoffman Estates, Woodstock and Bolingbrook.

But beset by a depressed housing market and a brutal recession that affected most developers, Kirk stopped building in May and faced mounting debt for the first time in its history. The company filed for Chapter 11 bankruptcy and sought to work out agreements with creditors, vendors and other customers.

Earlier this week, the bankruptcy court judge denied the confirmation of the company's reorganization plan. The company sought to continue operating while repaying hefty loans over several years. The judge wasn't convinced the plan was feasible. So the company remains in Chapter 11 reorganization and a liquidation order hasn't been issued yet by the court.

Still, the clock is ticking. And Carroll said he's spending the upcoming days sorting it all out and searching for the best option.

"That's why we filed Chapter 11. We wanted to keep the doors open. That remains our goal," Carroll said.

Since the bankruptcy filing in May, Kirk Homes has closed on about 20 homes and more are expected next week, he said.

And those who have put down earnest money, often ranging from around $5,000 to about $10,000, could expect their money back in full, he said.

"We have segregated out that money into a separate account," Carroll said. "Those who put down deposits will be fully refunded."

He declined to say how much is in that account, but wants to reassure homebuyers that they won't have to depend on the smaller amount stipulated in laws.

Bankruptcy laws provide for $2,425 per person or $4,850 per couple, depending on who signed the contracts.

In many bankruptcy situations, whether those individuals or couples get anything depends on how much is left after the banks, lawyers and other primary creditors are paid, legal experts said.

Also, Carroll said the staff of 15 workers have been putting in long hours during this rough time, aiming to make good on their deals.

"Business in general has been a challenge for far longer than we've been in Chapter 11," said Carroll. "But I've always been a pretty hands-on person and that has only increased as the market changed.

"But everyone at Kirk Homes has been working hard to close on homes. The whole team has really been committed to keeping the company going."