NEW YORK, NY - Tarragon Corp. is the latest homebuilder to be hit by the housing crisis. The company and its subsidiaries filed for Chapter 11 bankruptcy reorganization in a New Jersey court, according to a press release. Details on the company's assets and liabilities were not immediately available, and CEO William S. Friedman did not immediately return a phone call for comment.
The firm has been an active developer of multifamily housing for rent and sale in Florida, Texas, Tennessee and the Northeast. Prominent local projects include the high-rise River House in Fort Lauderdale, and the townhome community of Cypress Grove in Pompano Beach, a joint venture with Coscan.
The bad news for Tarragon stockholders: The company said it does not expect there will be any distribution to equity holders in conjunction with the bankruptcy cases. Shares (NASDAQ: TARR) dropped from a dime to a nickel on the news.
The filing shouldn't come as a surprise to anyone who has followed the recent fortunes of the firm, which included steady losses, more than $105 million for the first nine months of the year, bargain sales of assets, shareholders suits, deposit forfeiture on land deals, compliance trouble with NASDAQ, margin calls on the stock of the chairman and his wife, and the company's inability to secure long-term financing.
Tarragon said it had a commitment for debtor-in-possession financing from an affiliate of ARKO Holdings, an Israeli public company, and said the bankruptcy filing shouldn't have any day-to-day effect on Tarragon's property management subsidiary, or on the operation of its rental apartment properties.
Friedman said in a release that, based on discussions with unsecured note holders and the support of AKRO, he expects to structure a consensual plan with the creditors to preserve the value of its property management and development platforms, and maximize any return to creditors.
The Tarragon board, which is being advised by Lazard and Friedman, said it did not rule out additional asset sales and "all available alternatives."
Source: South Florida Business Journal