Well folks, Tousa finally filed for chapter 11 bankruptcy protection on January 29. I’ve been mumbling about the possibilities in the past few months with the A Questionable Future for Independence and Tousa Finally Gets Settlement Deal for Transeastern Homes posts and now it’s finally happened. Chapter 11 is a restructuring bankruptcy so the company will most likely stay in business but it puts a lot of those people building in the community of Independence with Engle Homes which is a subsidiary of Tousa on shaky ground.
The CEO of Tousa, Antonio Mon, is quoted in the WSJ saying that the current financial problems stem from its flawed capital structure and dramatic downturn in the housing market. Talk about pointing out the obvious. He also says that he views this as a financial transaction and that Tousa’s business is fundamentally sound. I just wonder why they’re filing for chapter 11 then.
Tousa secured a $150 million loan from Citigroup and will try to get permission to sell homes as they would ordinarily and to honor their warranty program. Mon stressed that deposits with them are secure and that prospective home buyers can feel safe placing deposits placed with them. If it was me, I’d wait and see how all this played out before giving them any deposits but that’s just me. Tousa currently has a backlog of 2,500 homes to be built. and will need permission to continue.
Just take a look at what happened to the customers of Levitt and Sons who recently filed for chapter 11. They are stuck in limbo and wondering if their homes will ever be built. I have a post about it called Levitt and Sons Files for Bankruptcy and Suspends Building. I just hope Tousa takes better care of their customers than Levitt and Sons.
We’ll have to wait and see how this bankruptcy affects the community of Independence in Winter Garden. There are numerous phases remaining and I’m sure many are in the process of building homes with Engle and Tousa. I sure hope Mon is being forthright.