Minnesota Home Builders Face Tough Times, Not Immune to Bankruptcy

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March 31, 2008

Homeowners are not the only ones affected by ongoing turmoil in the local housing market. According to a March 30, 2008 article in the Star Tribune, home builders are also facing these “desperate times.”

“Bailout Bidding” by David Phelps examines how home builders are altering their business models to survive. The Star Tribune article cites an anticipated rise in real estate-related bankruptcies in the coming year, based on recent statistics where new built inventories remain high, building permits are plunging and area home builders are having to auction off new homes just to stay afloat.

Briggs and Morgan bankruptcy attorney John R. McDonald was quoted in the article for his insight on current bankruptcy trends and Minnesota’s new home market.

“I don’t think we’ve reached the low point yet. We had one of the most robust developer and builder communities in the country…” McDonald said in the interview. “When buyers stopped coming, we had the market still building at full steam.”

McDonald represents clients in complicated restructurings and reorganizations, as well as in distressed business transactions and financings. As part of the Financial Institutions and Real Estate Section at Briggs, he has extensive experience representing financial institutions and other interested parties impacted by the subprime mortgage meltdown.