EAST BRUNSWICK, NJ-The $5 million in short-term financing that troubled developer Kara Homes thought it had in hand as it seeks to restructure through Chapter 11 is off, at least for now. According to a published report lender Medical Capital Corp. of Anaheim, CA has pulled the deal off the table, although company officials say they are continuing to negotiate with Medical Capital. Those negotiations are said to focus on Kara taking a lesser amount.
As reported by GlobeSt.com, the company filed for Chapter 11 protection earlier this month and subsequently announced that it had gotten the $5-million financing package to enable it to rehire laid-off employees and continue building homes. Company officials could not be reached for further comment.
The company did get permission from US Bankruptcy Court Judge Michael Kaplan on Monday to complete the sale of nine homes that are currently under contract, a series of deals that are expected to generate upwards of $6 million and produce about $800,000 in proceeds once construction lenders have been paid. Beyond that, Kara has approximately 300 homes to complete, most of them unsold.
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