Deal may jumpstart Antioch project
One of Neumann Homes Inc.'s beleaguered lenders has agreed to pony up an additional $300,000 to help the bankrupt builder sell off a defunct development in Antioch.
Neumann and Cole Taylor Bank will ask the U.S. Bankruptcy Court on Wednesday to approve a plan to liquidate the unfinished portion of the Clublands development.
The builder owes Cole Taylor more than $14.4 million the bank loaned for a planned development of 1,400 homes, only half of which were built. Cole Taylor is one of eight Neumann lenders owed money when the company filed for Chapter 11 bankruptcy protection in November.
A blessing from U.S. Bankruptcy Court Judge Eugene Wedoff would allow Neumann to borrow the $300,000 from Cole Taylor to pay for operating expenses, as well as any real estate taxes, maintenance and other expenses at the Clublands development. It also would allow for the sale of the Antioch development through a bidding or auction procedure.
The additional financing offer from Cole is the first by any lender doing business with Neumann since the company went bankrupt. In court papers, Neumann asserts the new arrangement with Cole Taylor will "solve the structural problems that heretofore have prevented (Neumann) from obtaining commitments for additional financing necessary to market and sell the Antioch development."
Representatives of Cole Taylor could not be reached for comment.
Neumann was the largest builder operating in Antioch.
Antioch's acting administrator Jim Keim said the home development at the Clublands will move forward, despite Neumann's woes.
"We believe there will be a lot of value for a subsequent developer to come in. This is simply a hiccup in the road," Keim said. "This is not the way we'd like things to happen, but we'll get through this and we're going to make sure this development happens, one way or another."
Warrenville-based Neumann Homes owes at least $235.6 million to creditors, contractors and material vendors, according to its November bankruptcy filing. The company has shuttered its sales, production and customer service offices and laid off all but a few dozen staffers to make good on its debts.
The builder cited the nationwide housing market downturn and a business deal with a Detroit homebuilder that soured in 2005 as key reasons the company failed. The builder has indicated in court records it intends to sell off most of its land assets and scale back its homebuilding activities in four states to meet its debt obligations.
Neumann in court papers has laid out a complicated financing program designed to free up cash to make good its debts and for projects it began before its bankruptcy filing.