To: McStain Homeowners, Friends and Associates
From: Tom and Caroline Hoyt
Date: May 28, 2009
It is with profound regret that we are writing to inform you that on Thursday, May 28, McStain filed for a Chapter 11 bankruptcy after 45 years in business.
The workout plan we are proposing is to operate within the bankruptcy to complete and sell the homes that are finished or under construction using a small remaining group of key employees.
The Indian Peaks South Neighborhood and several recent homes under construction are operated in separate limited liability corporations (LLCs) and are not a part of the Chapter 11.
Even though we have seen good sales activity in 2009, the effect of the dramatic market collapse last year coupled with price declines, and a severe restriction in bank funding for construction loans means that operating at our historical scale is virtually impossible. That economic reality, coupled with a backlog of liabilities, makes it abundantly clear that, at least until this "great housing recession" is over, there is no viable way for McStain to operate without going under the protection of bankruptcy.
For those of you who have purchased McStain homes, this filing means that we will no longer be able to service your new home warranty. You will now be responsible for calling your own service people when you have a problem. The names and numbers of the key contractors we used to build each home are listed inside one of the kitchen cabinet doors in every home. For purchasers whose homes are still under construction, McStain will be purchasing a 3rd party warranty.
Our plan under the bankruptcy is to complete and sell all homes that are currently vacant and unsold or under construction. We also hope to continue operating the IndianPeaks neighborhood and to finish building houses on the lots in Bradburn and LowryEastPark that are being constructed under separate LLCs. We believe this plan will get the vendors who do business with the company the maximum possible return on their outstanding payables.
We have been in business at McStain for nearly half a century and it is difficult to see the company wind down. But we enjoyed those years and the wonderful employees, customers, trade partners, and professionals with whom we worked. We thank you all for your friendship and support.
There will surely be some great changes to the housing business coming out of this recession. The old "more of everything bigger is better" mantra is due for a change and that is a good thing. There will always be a need for people who want to "Build a Better World".
Until then, we remain, yours truly,
Tom and Caroline Hoyt