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Neumann Homes to file for bankruptcy
By Michael Sean Comerford | Daily Herald Staff
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Published: 10/22/2007 6:31 PM

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One of the area's top five home builders is the latest victim of the recent housing recession.

Warrenville-based Neumann Homes on Monday laid-off most of its employees and said it intends to file for Chapter 11 bankruptcy protection.

"Even after the significant help we have received from our lenders this year the company can no longer weather this storm," said Kenneth Neumann, chief executive officer in a statement late Monday.

The company assured customers who have purchased homes not yet under construction that it will request a bankruptcy court to allow it to refund their escrowed earnest money.

The short statement made no mention of the Neumann customers with houses partially completed.

The company said it has been unable to "procure adequate funding to operate" after the downturn in its three key markets in Chicago, Denver and Detroit.

Neumann said it lost more than $60 million after entering the Detroit market in 2005.

Among other towns, Neumann has developments under way in Antioch, North Aurora, Gilberts, Grayslake, Hanover Park, Lakemoor and Wonder Lake.

Of its current inventory of 5,485 single and multi-family homes, less than half, 2,619, have been sold, according to Tracy Cross & Associates, a Schaumburg-based real estate research firm.

Its inventory of unsold homes reached 5 years, according to Cross, when 30 to 36 months is an average time for new homes to remain on the market.

Neumann has 46 developments active in 18 Chicago area towns, according to Cross.

The company had sales topping $500 million in 2005, according to Hoovers.com, and more than 400 employees. In the last two years it has suffered double digit sales declines, according to industry statistics.