‘They hit a brick wall’

Another local home builder has thrown in the towel.

Chesterfield-based Condrey Construction Co., which thrived during the housing boom by building high-end homes, has filed Chapter 7 bankruptcy to liquidate what little assets it has left. The filing will likely leave dozens of local vendors hanging.

Condrey was riddled with debt to local banks on unsold residential lots and hundreds of thousands of dollars to dozens of local vendors for goods items such as lumber, doors, architectural services and flooring.

“The story isn’t any different than a lot of the bankruptcies you’re seeing right now particularly in this industry,” said Troy Savenko, an attorney with Gregory Kaplan who is representing Condrey.

The family-owned company was founded in the early 1990s and was run by husband and wife Keith and Sally Condrey. Their son, Keith Jr., is also in the business and had a share of the company in his name, according to the bankruptcy filings.

Condrey listed in the bankruptcy filings assets of $100,000 to $500,000 and liabilities of $1 million to $10 million.

Among its debts is $609,361 owed on five residential lots, three of which are in the golf and country club community The Highlands.  Those five lots are now valued at $424,000, according to the bankruptcy filing, illustrating the declining values that are killing home builders stuck with unsold lots.

Village Bank is owed more than $350,000 on loans for three lots. Condrey owes more than $250,000 to Petersburg-based Virginia Commonwealth Bank and an unknown sum to Peoples Bank of Virginia. Three lots have had already been foreclosed on.

Tom Winfree, president and CEO of Village Bank, said the banks listed as secured creditors will likely reclaim the lots through foreclosure after petitioning the bankruptcy trustee, as is typical in such instances.

The banks will then look to resell those lots.

“It’s unfortunate,” said Winfree of Condrey’s situation. “But for some builders, their financial strength, their resources are used up and they hit a brick wall. The commodity which they sell, a house, is just not selling.”

Small amounts are also owed to the IRS and the state department of taxation.

The Condreys themselves put in more than $130,000 in loans to the company for operating expenses.

“Separate from the loan, they have not taken a salary for almost the last year,” Savenko said of the Condreys.

The bankruptcy filings also illustrate how the recession quickly changed the fortunes of many builders. The company brought in $4.46 million in income in 2009. That plummeted the following year to $1.08 million.

It had also recently faced four lawsuits in local courts for defaulting on a promissory note and contract disputes.

“As recently as a couple years ago they were a gold award winner with the Parade of Homes,” Savenko said of the company. “At this juncture, you’re starting to see even the strongest competitors collapse under the weight of the lack of work that’s out there.”

Just as its bankruptcy will trickle through the local economy and affect other businesses, Condrey itself took some direct knocks from similar instances, Savenko said. One of Condrey’s larger vendors went bankrupt, leaving a large sum it was owed noncollectable.

Around the same time, Savenko said, Condrey had a deal in the works to sell one of its houses for $900,000. A week before the closing, the lender for the buyer backed out of the loan.

“By time they were able to resell it, it was a $300,000 hit,” Savenko said. “Those were substantial blows to their operations.”

Secured creditors like the banks will at least have solace in repossessing the real estate, albeit at prices lower than what is owed. But the other creditors will likely be left empty-handed.

“Based on what’s in the bankruptcy schedule, it doesn’t look good for unsecured creditors,” Savenko said.

As for the Condrey family, Savenko said they will look to get passed the company’s downfall.

“The father and son, this is their trade. They’ll try to start from scratch in the construction industry.”

But the business’s debt may continue to haunt the family.

“What you see in all of these situations, the owners, particularly in this industry, they have to guarantee all of the loans they get,” Savenko said. “So when the company fails, it means those guarantees are triggered and the owners are under the same mountain of debt.”

Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]

Another local home builder has thrown in the towel.

Chesterfield-based Condrey Construction Co., which thrived during the housing boom by building high-end homes, has filed Chapter 7 bankruptcy to liquidate what little assets it has left. The filing will likely leave dozens of local vendors hanging.

Condrey was riddled with debt to local banks on unsold residential lots and hundreds of thousands of dollars to dozens of local vendors for goods items such as lumber, doors, architectural services and flooring.

“The story isn’t any different than a lot of the bankruptcies you’re seeing right now particularly in this industry,” said Troy Savenko, an attorney with Gregory Kaplan who is representing Condrey.

The family-owned company was founded in the early 1990s and was run by husband and wife Keith and Sally Condrey. Their son, Keith Jr., is also in the business and had a share of the company in his name, according to the bankruptcy filings.

Condrey listed in the bankruptcy filings assets of $100,000 to $500,000 and liabilities of $1 million to $10 million.

Among its debts is $609,361 owed on five residential lots, three of which are in the golf and country club community The Highlands.  Those five lots are now valued at $424,000, according to the bankruptcy filing, illustrating the declining values that are killing home builders stuck with unsold lots.

Village Bank is owed more than $350,000 on loans for three lots. Condrey owes more than $250,000 to Petersburg-based Virginia Commonwealth Bank and an unknown sum to Peoples Bank of Virginia. Three lots have had already been foreclosed on.

Tom Winfree, president and CEO of Village Bank, said the banks listed as secured creditors will likely reclaim the lots through foreclosure after petitioning the bankruptcy trustee, as is typical in such instances.

The banks will then look to resell those lots.

“It’s unfortunate,” said Winfree of Condrey’s situation. “But for some builders, their financial strength, their resources are used up and they hit a brick wall. The commodity which they sell, a house, is just not selling.”

Small amounts are also owed to the IRS and the state department of taxation.

The Condreys themselves put in more than $130,000 in loans to the company for operating expenses.

“Separate from the loan, they have not taken a salary for almost the last year,” Savenko said of the Condreys.

The bankruptcy filings also illustrate how the recession quickly changed the fortunes of many builders. The company brought in $4.46 million in income in 2009. That plummeted the following year to $1.08 million.

It had also recently faced four lawsuits in local courts for defaulting on a promissory note and contract disputes.

“As recently as a couple years ago they were a gold award winner with the Parade of Homes,” Savenko said of the company. “At this juncture, you’re starting to see even the strongest competitors collapse under the weight of the lack of work that’s out there.”

Just as its bankruptcy will trickle through the local economy and affect other businesses, Condrey itself took some direct knocks from similar instances, Savenko said. One of Condrey’s larger vendors went bankrupt, leaving a large sum it was owed noncollectable.

Around the same time, Savenko said, Condrey had a deal in the works to sell one of its houses for $900,000. A week before the closing, the lender for the buyer backed out of the loan.

“By time they were able to resell it, it was a $300,000 hit,” Savenko said. “Those were substantial blows to their operations.”

Secured creditors like the banks will at least have solace in repossessing the real estate, albeit at prices lower than what is owed. But the other creditors will likely be left empty-handed.

“Based on what’s in the bankruptcy schedule, it doesn’t look good for unsecured creditors,” Savenko said.

As for the Condrey family, Savenko said they will look to get passed the company’s downfall.

“The father and son, this is their trade. They’ll try to start from scratch in the construction industry.”

But the business’s debt may continue to haunt the family.

“What you see in all of these situations, the owners, particularly in this industry, they have to guarantee all of the loans they get,” Savenko said. “So when the company fails, it means those guarantees are triggered and the owners are under the same mountain of debt.”

Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]

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Bruce
Bruce
11 years ago

Keep your head up, treat people fairly and understand you didn’t create the financial meltdown which is forcing many in the development industry down this path.
Been there, done that. Your family has always been your most valuable asset regardless of the times.

james
james
11 years ago

This is another example of how high-end builders must adjust to building lower-end homes if they can. Condrey lost more than 70% of their revenue in one year. No business can withstand that. They got hit too fast to be able to adjust. The new new home market in Richmond will have very little room for anything over $300,000. Local governments are going to have to give in and allow new homes worth less than $300,000 to be built or the new home market won’t move, property tax revenues won’t increase, local governments won’t get healthy and the recession will… Read more »

Emmett Smith
Emmett Smith
11 years ago

The sub-contractors are the ones that have taken the big hits.