Fort Lauderdale-based home builder Levitt and Sons files for bankruptcy
Levitt and Sons of Fort Lauderdale on Friday became the nation's largest builder to file for bankruptcy as the housing market continues to crumble.
The storied company filed for Chapter 11 protection from its creditors in U.S. Bankruptcy Court in Broward County. It lists assets of less than $1 million and debts of more than $100 million.
Levitt and Sons said it will explore the sale of some or all of its assets, including land and unsold homes, to repay creditors.
The bankruptcy came after the company defaulted on more than $300 million in loans from Wachovia Corp. and Bank of America, among other lenders, according to a Securities and Exchange Commission filing.
Builders across the nation have been slammed this year as the housing market deteriorates. A glut of unsold homes, rising cancellations, the credit crunch and lost revenue because of falling prices have devastated the industry.
"The Levitt name carries a lot of weight in the homebuilding industry," said Mike Larson, a housing analyst with Weiss Research in Jupiter. "To see them file for bankruptcy, it's a testament that this downturn is going to claim victims."
During the past two months, Levitt and Sons laid off most of its 412 workers and stopped building houses as it tried to restructure debts. It said Friday that negotiations with lenders will continue.
The company does not have any developments in Palm Beach or Broward counties but is building Seasons at Tradition, a 55-and-older community in Port St. Lucie. Elsewhere in Florida, it has projects on the west coast, in Orlando and in Jacksonville. It also builds in Georgia, South Carolina and Tennessee.
Levitt and Sons gave no assurances to buyers with unfinished homes, but said it will try to complete some of them and hold closings for previously finished properties. Eventually, other builders could step in and finish construction.
"There is not a single, simple answer that will apply across the board," said Paul Singerman, a bankruptcy lawyer for Levitt and Sons. "The circumstances will vary depending on the decisions that each of the lenders makes. We are very sensitive to the difficulties of our valued customers. We know this is not easy."
Angelo Palermo, 69, is renting an apartment in Pembroke Pines while waiting for his $380,000 house in Port St. Lucie to be finished. He isn't optimistic about recovering his $38,000 deposit.
"My attorney told me it looked like they were going to go into bankruptcy," Palermo said Friday. "But if they go into bankruptcy, I'm at the bottom of the list for collecting money."
The builder's five largest unsecured creditors, owed $338.6 million, are: Wachovia Bank owed $112.5 million; Bank of America, owed $103.9 million; KeyBank, owed $96.5 million; Regions Bank, owed $24.7 million; and Ohio Savings Bank, owed $1.1 million.
Levitt and Sons said its financial problems worsened in August, when the mortgage crunch reduced the pool of buyers and increased home cancellation rates.
Certified company reorganization accountant Lawrence Young will oversee the builder's bankruptcy filing as chief restructuring officer. He has more than 15 years' experience in crisis management and business reorganizations. Levitt home buyers can call 877-538-4889 for information about the status of their properties.
Abraham Levitt and sons William and Alfred started the company in 1929, pioneering the planned suburban community with Levittown on Long Island in 1949. It provided homes for soldiers returning from World War II.
Another Levittown opened five years later in Pennsylvania. The company has built more than 200,000 homes in the U.S., Puerto Rico, Canada and Europe.
The parent company, Levitt Corp., also of Fort Lauderdale, had assets of $900 million and debt of $780 million as of Sept. 30, according to a filing with the SEC. As of Friday, the parent moved Levitt and Sons' finances off its books.
Levitt Corp. also is the parent of master-planned developer Core Communities and owns a stake in Bluegreen Corp., a developer of vacation resorts. Alan Levan, head of Levitt Corp., also is the chairman of a big regional bank, BankAtlantic Bancorp.
None of those companies is affected by Levitt and Sons' bankruptcy, which had been expected for weeks.
Levitt Corp. announced in September that it was laying off as many as 200 of its 573 employees. Most of the cuts were to come from Levitt and Sons.
In October, the builder said it was laying off 158 more employees by year's end.
"They leveraged themselves to where they couldn't make their payments," said Mark Hodges, South Florida division president for K. Hovnanian Homes. "This is not the last of it."
In fact, homebuilders Kara Homes Inc. of East Brunswick, N.J., and Chicago-based Neumann Homes Inc. also have sought bankruptcy protection as a result of the housing crisis. Kara is the second-largest U.S. homebuilder in bankruptcy.
"Hopefully, a combination of lower interest rates and lower prices will eventually rekindle buyer interest," Weiss' Larson said. "But in the meantime, builders are going to continue to struggle."
Staff researcher Barbara Hijek and Bloomberg News contributed to this story.
Paul Owers can be reached at email@example.com or 561-243-6529.
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