From the Asbury Park Press:
Kara gets OK to sell nine homes, but financing falls through
BY DAVID P. WILLIS AND MICHAEL L. DIAMOND
A bankruptcy court judge today gave permission to Kara Homes to move forward with the sale and closing of nine homes.
Kara had hoped to get permission to restart construction of up to 300 homes, but a lawyer for the troubled home builder said the short-term financing to get the company started again had fallen through.
East Brunswick-based Kara, one of the largest home builders in central New Jersey, filed for protection from creditors under Chapter 11 of the bankruptcy law Oct. 5. It owes creditors — including banks, suppliers and employees — hundreds of millions of dollars. Customers who have contracts for uncompleted homes are also listed as creditors.
In an earlier court filing, Kara said it had lined up $5 million in financing to start
rebuilding and to start meeting its payroll for about 70 employees still working for the company. Kara said it also wanted to reimburse customers who had canceled their new home contracts before the builder filed for Chapter 11.
At a bankruptcy hearing today, Kara’s lawyer, David L. Bruck, said negotiations with Medical Capital Group, the entity that was to supply the financing, had fallen through on Friday.
U.S. Bankruptcy Court Judge Michael B. Kaplan gave Kara permission to move forward with the sale and closing of nine homes that are completed.
“I am concerned with nine families looking to close and who have probably sold homes and are on the hook,” Kaplan said.