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Dealipedia - John Foster Homes Inc Enters Bankruptcy

John Foster Homes Inc Announces Bankruptcy

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Deal Participants:
Bankrupt Company: John Foster Homes Inc View Profile Charts Homepage
Deal Financials:
Chapter: 11
Voluntary? Yes
 

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Date:
Announced: Feb 23, 2012
Banking Representation:
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PRESS RELEASE - John Foster Homes Inc Enters Bankruptcy

Henderson home builder John Foster Homes Inc. has filed for Chapter 11 reorganization, listing $12.6 million in potential claims.
The company’s bankruptcy attorney, Danny Bradford, said the bankruptcy results largely from a lawsuit that a customer filed after John Foster Homes won a legal judgment against the customer.

In an effort to collect the final $28,000 payment for a home it sold, the company sued in Virginia state court and won a judgment against the Gladstone, Va., resident, Bradford said. But the man sued in federal court in 2010, alleging safety issues in the home and racial discrimination. The man is demanding $12 million, including punitive damages.

Even though the case has not been decided, the lawsuit’s financial demands against John Foster Homes account for the bulk of claims listed on the company’s Feb. 13 bankruptcy filing.

“Of course, we believe these claims to be baseless ... ,” Bradford wrote in an email on Wednesday. “The legal costs associated with that suit, coupled with a slow market, prompted the Chapter 11 filing.”

The filing did not list assets. Some emergency filings are accepted without full financial information, which usually comes within a couple of weeks.

Henderson is in Vance County, which is north of Wake County and borders Virginia.

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Feb 24 '12
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