Kara emerges, Karagjozi ousted

From the APP:

PLAN OFFERS HOPE TO BUYERS

Kara Homes Inc. plans to emerge from bankruptcy within the next several months with a new name, a new owner and fewer developments, according to documents filed Thursday with U.S. Bankruptcy Court.

The plan, if approved, paves the way for the builder, renamed Maplewood Homebuilders LLC, to complete 471 homes in 13 of Kara’s projects. Of those homes, 129 were already under contract when Kara filed for bankruptcy last fall.

It also calls for the ouster of Zuhdi Karagjozi, the Rumson resident who took the home builder to dizzying heights before a sudden crash.
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East Brunswick-based Kara filed for Chapter 11 bankruptcy in October with assets of $350 million and liabilities of $227 million. The builder said it was devastated by the downturn in the residential real-estate market.

It left the deposits of home buyers and the money owed to subcontractors in jeopardy. Since then, Kara has reached agreements with lenders to complete some projects with the help of outside investors, while selling other projects.

The disclosure plan gave insight into how the company plans to emerge from bankruptcy. It calls for Maplewood Homebuilders to be owned by Glen Fishman, a Lakewood developer who has been instrumental in Asbury Park’s redevelopment, and Plainfield Specialty Holdings II Inc., a hedge fund based in Greenwich, Conn.
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Since April, Kara has sold 10 uncompleted developments and has plans to sell three more. In some projects, buyers are in limbo. For example, Amboy National Bank is trying to find a buyer for Kara’s Horizons at Birch Hill in Old Bridge. Otherwise, it will foreclose on the project.

Neither Plainfield nor Fishman are new to the story. Plainfield, part of Plainfield Asset Management LLC, has loaned Kara $7 million to keep the home builder’s operations going, which helped Kara avoid liquidation.
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Left out is Karagjozi, who as recently as April appeared to have an ownership stake in the restructured company. But the plan said Karagjozi’s shares in the company will be terminated, and he won’t receive an interest in the new company.

It marked a sudden end for Karagjozi, who started Kara in 1999 and within three years turned it into what a trade publication said was the nation’s fastest-growing builder — a remarkable feat given New Jersey’s reputation for slow growth.
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One expert said Karagjozi’s departure isn’t a surprise. A hedge fund might replace management of a home builder to restore credibility with lenders.