Wednesday, July 2, 2008

Is Renaissance Custom Homes Close To Bankruptcy?

From the Oregonian:

The stubborn real estate slump has forced Trinity Carpet Brokers, a major regional supplier of carpet and flooring, into bankruptcy.
The Milwaukie-based company filed a Chapter 11 reorganization in late June.
Barry Caplan, a Portland bankruptcy lawyer working for Trinity, said the company's ability to borrow money was restricted by the failure of two large customers to keep current on their bills.
One of those customers was Renaissance Custom Homes, which owes Trinity more than $1 million, according to bankruptcy documents.
Nearly two years since the end of the real estate boom, an increasing number of developers, subcontractors and suppliers are flirting with insolvency.
Residential sales remain slow, prices are down, and lenders are growing increasingly conservative, in part because many have seen enormous increases in bad real estate loans.
"We have a number of major (real estate industry) participants -- the developers, the lenders, the customers, the suppliers -- who are experiencing problems that they may not have experienced recently, or ever before," Caplan said. "There was an epidemic of overbuilding and overpaying."
Trinity's revenues reflect the bust, going from $57.9 million in 2006 to $43 million in 2007 to just more than $13 million through the first six months of 2008, according to bankruptcy documents.
Caplan said Trinity's financial crunch stemmed in part from an inability to get additional credit from its major lender, Sterling Savings Bank of Spokane.
Trinity's ability to borrow was based on its accountants receivables -- money due from its customers.
When a portion of the receivables owed to Trinity by Lake Oswego-based Renaissance and D.R. Horton of Fort Worth, Texas, remained unpaid after 90 days, Trinity was able to borrow less money, Caplan said.
Sterling officials declined comment. Renaissance could not be reached.
Trinity shuttered its retail shops in the months before filing for bankruptcy. It has struck a tentative deal to sell its wholesale operation to SC Design Inc. of San Diego, for about $3.1 million. The deal must be approved by the court.