Troubled TOUSA goes Chapter 11
If you'll recall, I highlighted TOUSA as a builder that was facing severe pressure due to its heavy exposure to some of the weakest national housing markets, including Florida. The company missed interest payments on a combined $685 million in debt earlier this month. Noteholders and unsecured creditors will get claims on new TOUSA shares as part of the reorganization, which is being financed with $150 million in debtor-in-possession financing from Citigroup.
TOUSA has about 2,500 homes in its backlog. The company said it expects "business to continue as usual" for existing customers and new potential customers, as well as employees. However, in recent home builder bankruptcies, customers have seen disruptions and delays in the construction of amenities and homes -- as chronicled in this New York Times story on Levitt & Sons.
TOUSA is the largest builder to file for bankruptcy so far. For some perspective, it delivered just over 7,800 homes in 2006 versus just under 1,700 at Levitt. Meanwhile, the mega-builder Pulte closed on almost 41,500 homes that year, while D.R. Horton closed on 53,100 in its fiscal 2006 year.