From the New Brunswick Home News Tribune:
Shaky ground As lenders clamor to get paid, Kara Homes owner files for bankruptcy
Zuhdi Karagjozi stood outside the courtroom in U.S. Bankruptcy Court in Trenton last month, looking defeated. His shoulders drooped. His eyes were bleary. And he pleaded in a soft, raspy voice with reporters for help.
As the owner of Kara Homes Inc., all he ever wanted to do was sell homes and make people happy, he said more than once. He just needed the banks to work with him so that everyone could come out even.
“I just need help,” Karagjozi said. “I don’t have any powerful people behind me. I am just a self-made, hard-working person trying to do well (by) my home buyers.”
For Zuhdi (pronounced Zoodi) Karagjozi, it has been a remarkable turnaround. The East Brunswick-based home builder, the fastest growing in the nation just a few years ago, is in tatters. Though he has filed for protection from creditors under Chapter 11 of the bankruptcy code, banks and suppliers are clamoring to get paid, home buyers might lose hundreds of thousands of dollars, and Karagjozi has been reduced to an observer as others try to salvage his company.
People who worked with Karagjozi say he is likable, energetic and motivated. But in retrospect, they said the scene at the courthouse could have been avoided.
The company borrowed too much money at too high an interest rate, they said. And it couldn’t generate enough cash to pay its mounting bills. When the real estate market softened even a little the business collapsed.
“His luck ran out,” said Jonathan Bristol, a Morristown lawyer representing one of Kara’s lenders in the bankruptcy case and a friend of Karagjozi’s. “He rode the crest and took a long, hard fall.”
So the article is saying that at the end of the day Karagjozi is really just a generally good person who took on too much debt, at too high interest, and at the first financial setback would up a depressed spectator as his financial life was cared up before him in bankruptcy court? You mean he was a F@cked Borrower? Revenge, thy name is Karma.
the guy is a moron
“I just need help,” Karagjozi said. “I don’t have any powerful people behind me.
Get in line with the 40%, or higher, that have taken out ARM’s to finance their overpriced, depreciating POS!! What about your f***ed customers??? Are they still waiting to get their windows adjusted on their $1.25 mil home??? What about your f***ed suppliers??? Do they need help to get paid??? What about your unemployed ex workers?????? I guess you won’t categorize this bust as a soft landing!!!
Greed.
I’ve been closely following this case. See postings on the blog located at:
http://shorebubble.blogspot.com/
I am so reminded of similar situations in the past bubbles of ’79-’83 and ’90-’94. Here we have a developer with a wealth of ego and an empty bank account heading South. I will give him credit (as did a large number of banks and other creditors to the tune of something like $500,000,000 when it is all said and done). This case is all about liquidation and not reorganization. Lots of people are going to be hurt.
sc,
I’ve been following your replies on the Shore Bubble blog. Thanks for your insight and opinion on the Kara issue.
jb
This bankruptcy case brings into play something we did not see in previous real estate cycles. That is the availability of access to information about the status of bankruptcy cases. In complex cases like this, about the only way the “run of the mill” unsecured creditor could find out what was going on was to go to the court clerk’s office and look in the file. Today, with the Internet information about what is going on is certainly more available. For the Kara Homes case, it looks like someone (although I’m not exactly sure who) is posting case information on a blog (see http://www.karahomescreditors.blogspot.com/ ).
The information provided by the Kara Blog tells us that the case appears to be one headed towards the hiring of a whole bunch of professions that include a collection of attorneys and financial advisors. I find it interesting the Debtor needs a financial advisor (Sullivan & Company) and the Unsecured Creditors’ Committee also needs a financial advisor (J.H. Cohn LLP & its 3 identified professional). You add to this the Chief Restructuring Officer (a host of employees of Traxi LLC) and as you can see the costs associated with this large number of professionals is going to do little to enhance the chances of creditors ever receiving a dime from this bankruptcy.