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EAST BRUNWICK, NJ-Locally based Kara Homes has picked up some financial assistance as it proceeds through a Chapter 11 reorganization. As reported byGlobeSt.com,the company filed a Chapter 11 petition earlier this month amid reports of employee layoffs and uncompleted home orders.

In a motion filed yesterday with the US Bankruptcy Court, District of NJ, the company’s attorney’s asked for permission to proceed with their reorganization plan with the help of the new funding. Company officials say they have obtained a $5-million short-term loan from Medical Capital Corp., an Anaheim, CA-based fund manager that primarily invests in medicine-related ventures.

Kara’s motion spells out the use of the funding to pay its employees. Earlier this month, the company laid off 100 workers, leaving it with a staff of 70. With more employees back on board, Kara says it will spend another portion of the funds to complete its backlog of home orders, said to number 300. Company officials say that will generate more than $200 million in revenues to help it reorganize. Finally, company officials say they will use some of the funding to reimburse buyers who backed out of their contracts when Kara filed for Chapter 11.

“The insolvency…casts an aura of distrust upon the developer,” states the company’s motion, signed by lead attorney David Bruck. “Removal of that perception is critical to the ability to reorganize.



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