Maronda Homes Inc., the region's third-largest home builder, filed for bankruptcy protection from creditors yesterday amid a national and local housing market that continues to stagnate.
The Findlay-based company owes creditors as much as $100 million and hasn't been able to renegotiate credit terms, according to documents filed in U.S. Bankruptcy Court in Pittsburgh. The company that builds houses in Florida, Georgia, Kentucky and Ohio, as well as Pennsylvania, said it wants to restructure under Chapter 11 of the bankruptcy code.
For Maronda customers, homes will be built, and closings will be held on time "with no issues whatsoever," according to attorney Joseph F. McDonough, representing Maronda.
U.S. Bankruptcy Judge Judith Fitzgerald approved an order that closings continue, he said.
"Maronda Homes made the difficult decision to seek Chapter 11 bankruptcy protection because certain banks failed to perform their credit obligations," a statement from the company said, noting that only three out of more than 30 Maronda companies filed for reorganization. Those filings relate only to Pennsylvania and Ohio operations, the statement said.
Family-owned Maronda has been building homes since 1972 and listed assets worth as much as $500 million in court documents. Maronda Homes lists 46 housing developments in Allegheny, Beaver, Butler, Washington and Westmoreland counties, as well as developments in 12 cities in Florida, including Daytona Beach, Jacksonville and Orlando.
Housing starts in the Pittsburgh region fell to the lowest level in more than 16 years in 2010. There were 2,778 housing units started, down 1 percent from the year before, according to Tall Timber Group in Ross. Sales of new homes in the region were down by 9 percent in March from a year ago. There were 141 sold last month, down 9 percent from 155, according to South Side-based RealStats.
Maronda said in court documents that it was left with no option but to file for bankruptcy because it could not reach a revised financing agreement with its 14 lenders, led by Bank of America and Wells Fargo.
Maronda blamed "the recalcitrance of Huntington Bank and the refusal of the lenders to solve the stalemate and proceed with revised terms" for pushing it into bankruptcy. Maronda said all but Huntington National Bank agreed to the revised loan agreement reached in December, and the other banks would not sign the deal without all banks on board.
Huntington spokesman Bill Eiler said the bank has a policy of not commenting on litigation.
Maronda said it ran into financial problems with its lenders in March 2010 when a new financing deal raised interest rates and required substantial collateral on Maronda's development projects. Beginning in October, Maronda said its lenders took all of the proceeds from the sale of properties. Maronda said it could not continue to operate under those terms.
Reported by Pittsburgh Tribune-Review (4/19/2011)
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