Liquidation as opposed to reorganization is thought to be the plan in a recent Chapter 7 bankruptcy filing made by Paradise home builders, as the company is essentially "throwing in the towel" in leaving 30 purchased homes uncompleted, as reported by the Herald Tribune.
Paradise Homes was one of 16 home builders that were approved to develop the much-sought-after community of Lakewood Ranch, before filing for bankruptcy in Tampa's federal court on October 25.
Approximately 30 home buyers are now wondering who will be completing their homes, and at what additional costs.
There are about a dozen Paradise Homes under different stages of construction and 18 more that were purchased that have yet to be built.
Builder George Frudakis, of Gafko Inc., believes that he can complete some of Paradise's construction without an additional cost to home owners.
Paradise president, Jim Butler, filed for Chapter 7 protection for two of his companies. A Chapter 7 bankruptcy usually calls for company assets to be liquidated instead of reorganized.
Bankruptcy and litigation attorney Christopher Smith commented that with a Chapter 7 filing "You are basically throwing in the towel."
Butler is seeking Chapter 7 protection for Extreme Remodelers of Sarasota LLC – and documents show that Extreme Remodelers does business as Paradise Homes. He is also seeking protection for Paradise Lifestyle Center LLC which does a cooking demonstration and appliance sales business. Paradise Lifestyle operated on Main Street in Lakewood Ranch until it closed its doors on October 25.
Debtor assets and liabilities for both filings are listed as between $1 million and $10 million.
Christine L. Herendeen was appointed trustee for liquidation by Federal Bankruptcy Judge K. Rodney May.
Alan Tannenbaum is the attorney representing two Paradise buyers. Tannenbaum commented, "Some of the other qualified builders may also be talking to some of the owners about being the completion contractor."
Frudakis said that many of the Paradise buyers that he has spoken to "are so angry."
Fred Moor, a Sarasota-based attorney representing a number of Paradise lot owners, said, "One of the recurring themes I have heard, as I have spoken with this large number of lot owners, was their reliance on Lakewood Ranch's ambassadors and marketing efforts representing the 'rigorous standards' builders must meet in order for Lakewood Ranch to approve them and allow them to build within the community and the 'constant review' Lakewood Ranch conducted of these builders."
At press time Paradise is still one of the 16 Lakewood Ranch builders that had been approved. The Paradise website states, "Builders must meet rigorous standards in order to be invited to build at Lakewood Ranch. Each approved builder has been selected for the quality of their construction and the superior customer service they provide."
There are 200 creditors – including contractors, lot buyers, home buyers and former employees – that were listed in the initial filings. Any further creditors must be added to the list by a November 8 deadline and creditors will be addressed on November 30.
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