The excesses of the housing boom pushed another major Sacramento home builder and land developer on Wednesday to seek personal bankruptcy protection from creditors.
Christo Bardis, co-founder of Sacramento-based Reynen & Bardis Communities, filed for Chapter 11 protection in U.S. Bankruptcy Court in Sacramento, the development firm announced. He listed liabilities of $100 million to $500 million and assets between $10 million and $50 million.
Bardis' move came six months after his longtime partner in the company, John D. Reynen, sought similar protection.
In a statement late Wednesday, Bardis called the bankruptcy filing a "difficult decision" and an "essential step in continuing to demonstrate that we take our obligations to creditors very seriously."
Bardis said he believes the move is a "prerequisite to receiving reciprocal support from those creditors" and to keep the company alive for future home building.
Bardis' lawyer David Meegan said, "We have some preliminary indications from certain of the creditors that they will support a plan that is mutually beneficial."
Bardis personally guaranteed many of the same business loans as Reynen, Meegan said.
The filings do not apply to the partners' 35-year-old building firm, which controls 18,000 acres of residential land in California and Nevada. But it's a fresh blow to an area company that ranked 70th nationally for U.S. home sales in 2005 and was named by colleagues in 2004 as Sacramento-area builder of the year.
Company spokeswoman Michele McCormick described the filing Wed-nesday as a "necessary step" for the firm to continue talks with numerous creditors.
"It was difficult to move forward with one owner in bankruptcy and the other not," she said. "Both owners really need to be formally committed for restructuring plans to move forward."
The court filing was another startling reminder of how a three-year housing downturn has crushed ambitious expansion plans hatched in the heydays of this decade's housing and land boom.
Both Reynen and Bardis personally guaranteed bank loans obtained to expand their privately owned company throughout the fast-growing Central Valley and Nevada. That means creditors have rights to seize their personal property as collateral for unpaid debts. The bankruptcy filing enables Bardis to shield his personal assets from creditors.
Most of the millions of dollars now owed by Bardis and Reynen were used to pay for thousands of acres of land that have since collapsed in value.
"Both he and John Reynen … backed a lot of these deals with their personal fortunes," said Dean Wehrli, a vice president with the consulting firm Sullivan Real Estate Advisors. "They were way, way too hungry for land during the good years and even a little bit beyond. … They were still buying even after it was obvious that things were changing."
Wehrli said the duo bought land in choice locations throughout the Central Valley in an attempt to make Reynen & Bardis one of the premier land developers and builders in the area.
"They bought in good areas," he said. "It's just that they bought at the wrong time. They bought big chunks of land at the wrong time."
Bardis' action Wednesday is the third by a major area land developer and home builder since April.
Filing most recently, in August, was famed California highway contractor C.C. Myers, developer of the Auburn-area Winchester Country Club. Myers, too, personally guaranteed loans received to develop his luxury 409-lot residential and golf development.
In August, Myers filed for protection against $41 million owed to Charlotte-based Wachovia Bank. The bank, stumbling from its own troubles with failing home loans, was recently bought by San Francisco-based Wells Fargo & Co.
A fourth area home builder, Sidney B. Dunmore, saw his regional home building empire dissolve into bankruptcy last year. But Dunmore, unlike Myers, Reynen and Bardis, did not personally guarantee loans he obtained to buy land and expand his company into the Central Valley. Creditors, however, are threatening to take his homes in Palm Desert and Granite Bay.
Last April, McCormick said Bardis had no plans to file for bankruptcy protection. She said then it was believed that Reynen's actions would satisfy creditors.
On Wednesday, she said discussions with creditors changed that belief.
Reynen & Bardis Communities sold 24 homes from January through August of this year in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Costa Mesa-based Hanley Wood Market Intelligence. That's down sharply from 140 sales last year.
The 2008 bankruptcy filings come as Sacramento-area builders are on track to sell just 5,300 to 5,500 homes this year, according to the Folsom-based Gregory Group. That's a two-thirds drop from 2004, a top-selling year that fueled much of the thirst among regional builders for new land.
Call The Bee's Jim Wasserman, (916) 321-1102. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.
