Court denies reorganization: Kirk Homes ordered to liquidate

Kirk Homes CEO John Carroll's fight to keep the beleaguered builder's doors open ended Tuesday when a U.S. Bankruptcy Court judge ordered it to liquidate.

The Streamwood company was ordered to convert its Chapter 11 filing to Chapter 7 liquidation and a trustee will be appointed in the next day or two. Also, about a dozen employees were let go last Friday and a few remain to help in this final phase, said Carroll.

"In a contested Chapter 11 case, and the people who are contesting are very large financial institutions, it comes down to money and time," Carroll said.

He ran out of both, he said. He felt the company's reorganization and repayment plan was good, but when the court denied it last month, that meant starting over with another plan and creditors were pushing too hard to liquidate.

"The company realized the only thing left was to do this," said Kirk attorney Forrest B. Lammiman with Meltzer, Purtill & Stelle of Chicago and Schaumburg.

In late September, Carroll vowed to return earnest money to waiting customers because that money was segregated into a separate account. He provided about $50,000 in refunds, he said Tuesday.

"We had five customers waiting and they had all requested their money back," said Carroll.

Kirk 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 like many other regional and national builders, Kirk was beset by a depressed housing market and a brutal recession. Kirk stopped building in May and faced mounting debt for the first time in its history.

It filed for bankruptcy and sought in vain to work out agreements with creditors, vendors and other customers.

"The process was a difficult one," Carroll said.