Seeking protection from creditors, Granite Bay home builder Dunmore Homes filed for bankruptcy late Thursday as it tries to restructure its business.
The move comes six weeks after Michael A. Kane, a Comstock Mortgage senior loan consultant in Sacramento, bought the firm from its second-generation owner, Sid Dunmore. It's the first bankruptcy filing by a Sacramento-area home builder as dozens of local and national firms struggle with the downturn in demand and prices for new homes.
Kane, who bought the firm Sept. 26 and became president and chief financial officer, was unavailable for comment Friday.
Dunmore executive John Slaughter said the bankruptcy filing was in response to "an aggressive move by one creditor to put themselves in a position ahead of others in a lawsuit."
"If that would have happened, it would have probably done some damage to the other creditors," said Slaughter, vice president of construction and operations. "The only way to head that off was to file bankruptcy. ... In effect it treats all the creditors correctly while we keep handling this."
He declined to name the creditor.
Dunmore filed for Chapter 11 bankruptcy protection, which allows it to remain in control of operations while reorganizing. Chapter 11 generally gives creditors and debtors more flexibility in working together. The filing does not affect other Dunmore family subsidiaries, the company said.
Dunmore Homes, founded in 1953 by the late George P. Dunmore and run since 1977 by his son Sid, says it has built 22,000 homes in California and Nevada. The company still controls 3,500 home lots between Bakersfield and Yuba City.
In August the builder halted construction and sales at all its projects, including those in Elk Grove and Linda, near Yuba City.
In its filing in a federal bankruptcy court in New York state, Dunmore listed assets and liabilities of more than $100 million. It claimed between 5,000 and 10,000 creditors.
Slaughter said Kane reincorporated the firm in New York after buying it from Sid Dunmore.
The builder's largest creditor is JPMorgan Chase Bank, which is owed $20 million, according to the filing. Dunmore also owes $9.1 million to Travelers Casualty & Surety Co. of America.
Its local and regional creditors include numerous subcontractors who have worked on Dunmore projects throughout the Central Valley. Among others, Carmichael-based Cal Sierra Construction is owed $4.1 million. Teichert Construction Inc. of Sacramento is owed $1.6 million, according to the filing.
Also among the creditors is Stuart Nelson of El Dorado Hills-based SGN Nelson Construction. The firm recently filed a breach of contract lawsuit against Dunmore. GGN is owed $391,000, according to the filing.
"They haven't paid me for lumber and services," Nelson said Friday. "We've got 10 houses that are partially built that they owe money on. I'm not very happy."
The bankruptcy case is being handled by New York law firm Pachulski Stang Ziehl & Jones. Dunmore also has retained New York-based investment banker Alvarez & Marsal to assist in its restructuring efforts.
By Jim Wasserman
Published 12:00 am PST Saturday, November 10, 2007 Story appeared in BUSINESS section, Page D2
