Meyer-Sutton files for Chapter 11
WASHINGTON --Georgia builder Meyer-Sutton Homes Inc. filed for protection from creditors Monday in the U.S. Bankruptcy Court in Newnan, Ga., the result of a "sudden and dramatic" decline in business.
Meyer-Sutton, of Fayetteville, Ga., listed total assets of about $44 million and debts of $40 million in its bankruptcy petition. Meyer-Sutton Homes and affiliate Meyer-Sutton Land Acquisition Inc. filed for Chapter 11 protection. Both companies are owned by James W. Buchanan.
"The housing market has suffered a dramatic decline in demand with the result problems of excess inventory and compressed profit margins," Buchanan said in court papers.
According to its bankruptcy filing, the company has cut new construction starts to two per month from 25 per month.
"The decrease in construction activity, along with a decrease in closed sales" forced Buchanan to put his company into Chapter 11, he said in court filings.
Meyer-Sutton owes its bank lenders about $26.5 million and its trade creditors $2.8 million. Atlanta's Stock Building Supply, owed $1.3 million, is its biggest unsecured creditor.
Founded in 1994, Meyer-Sutton Homes had $36.2 million in revenue last year. The land acquisition company brought in an additional $3.5 million.
The cooling housing market is squeezing builders across the United States.
The Commerce Department recently reported that housing starts in April were 16.1 percent lower than in April 2006. Atlanta's Beazer Homes USA Inc. posted a second-quarter loss of $43 million on declining home closings. New Jersey's Kara Homes Inc. filed for Chapter 11 protection last October amid slowing sales, loss of liquidity and delays on the ground that put off closings.
Meyer-Sutton intends to remain in business during its reorganization. Among the "first-day motions" in its bankruptcy case, the builder is asking for approval to pay vendors and employees.
