Wednesday, 20 June 2012

Real estate downturn claims Willard Rental

Ohio real estate owner Willard Rental Properties LLC looks to construct a new future through a consensual reorganization plan.

The Mansfield, Ohio, company and affiliates Willard Rental Properties LLP and Willard Home Improvement Inc. filed for Chapter 11 on Tuesday, June 19, in the U.S. Bankruptcy Court for the Northern District of Ohio in Canton.

Judge Russ Kendig is set to preside over a first-day hearing on Thursday. Willard seeks approval of motions to use its cash collateral to maintain operations, for joint administration of the cases, to pay employees and to continue utilities service.

Willard Rental Properties LLC operates about 40 residential rental units in Richland and Crawford counties, Ohio. One of the properties is a small apartment complex, and the rest are single-family homes or duplexes, according to court documents.

Willard Rental Properties LLP rents more than 900 residential or commercial units in Ohio.

Willard Home Improvement manages and maintains about 1,100 rental units controlled by the other two companies or Jerry and Janet Stackhouse. The Stackhouses own Willard Rental Properties LLC. Janet owns 99% of Willard Rental Properties LLP, and Jerry owns Willard Home Improvement.

Willard Home Improvement once had a construction business, but that operation was reduced when the real estate market crashed, according to court documents.

"The debtors experienced the same severe challenges as thousands of other real estate and construction firms across the county: too much debt; not enough cash," Willard said in court papers. The company said depressed real estate values and high unemployment had left its units with higher vacancies and the debtors with a lack of refinancing opportunities. Over the past year, the Stackhouses have used personal savings and tapped life insurance policies to keep the companies operating. The companies have liquidated nonessential inventory and are evaluating options to raise rents and cut additional expenses. In early 2012, the debtors hired BBP Partners LLC as financial adviser and McDonald Hopkins LLC for restructuring advice. Willard restructured some of its debts, but two of its lenders initiated foreclosure proceedings, and others have threatened to initiate them, court documents show.

Willard filed for bankruptcy protection to stabilize operations, shed unnecessary properties and negotiate a consensual Chapter 11 plan.

Willard Rental Properties LLC listed assets and liabilities between $1 million and $10 million in its petition.

The company owes prepetition lenders about $27.4 million, according to court documents. Fifth Third Bank holds much of the debt, but court papers did not specify the lender's claim. Evalyn M. Fisher Living Trust (owed $75,000), Edward L. Fisher Living Trust ($75,000) and Lowe's Cos. ($10,463.41) are listed as the largest unsecured creditors.

Shawn M. Riley, Ann L. Zarick and Michael J. Kaczka of McDonald Hopkins are debtor counsel. Riley and Kaczka did not immediately return calls for comment. Zarick deferred comment to Kaczka.


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