Oct 22, 2007 10:44 pm US/Central
Major Illinois Home Builder Faces Bankruptcy
Neumann Homes Has 15 Subdivisions In Illinois
CHICAGO (CBS) ―
The volatile real estate market has pushed one of the state's biggest home builders, Warrenville-based Neumann Homes, to the brink of bankruptcy.
CBS 2's Dana Kozlov reports on what that means for customers, and for the real estate market.
Neumann Homes has built 15 suburban subdivisions. Some homes are finished, others are not –a potential concern now that the builder announced it's going under.
"Definitely it will affect down the line if there are any major issues coming up," said Neumann Homes homeowner Chetan Kale, who just moved in a month ago.
CEO Kenneth Neumann says a downturn in the real estate markets in Chicago, Detroit and Denver is the reason for the company's decline. He says the company now faces $60 million in losses.
Neumann tells CBS 2 after two years of trying to keep the company afloat he now has no choice but to file for chapter 11. But Geneva real estate broker Terra Ayres says this doesn't mean all builders are in trouble.
"I think it's going to affect people who have a significant amount of overhead, moreso," Ayres said. "Those that are running a lean, tight ship in the real estate and building industry are going to be able to weather the storm."
Still, some Neumann Homes homeowners are concerned about what this means for them.
"We received a tax bill that they were supposed to pay that's late and they haven't paid and the woman will not get back to me about it," said Neumann Homes homeowner Laura Fleury. "So that's kind of been a problem and we have an issue with the toilet and they haven't gotten back to us either."
And what will happen to customers presently under contract? Neumann says he'll ask the bankruptcy court to return earnest money to those whose homes haven't been started. And he'll work with lenders and the court to "diligently" finish 90 area homes currently under construction.
Kenneth Neumann told CBS 2 he laid off most of his employees - more than 100 people – Monday, and plans to file for Chapter 11 in the next couple of days.
He says it's been a painful time for him and his wife, who started the company 15 years ago.
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