Kirk files for Chapter 11 bankruptcy to work with lenders on financing

By Caroline Salls

Pittsburgh, May 13 - The Kirk Corp. filed for Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the Northern District of Illinois.

"We are confident that the reorganization process gives us more opportunity to work with our lenders JP Morgan Chase, Bank of America and others, and to secure additional financing, which will allow us to continue building high quality homes for Chicago area homeowners for many years to come," president and chief executive officer John Carroll said in the release.

"We enter this process with strong fundamentals, robust sales at many of our communities and the continued commitment of our employee owners to work through this temporary situation and emerge as an even stronger organization."

Carroll said day-to-day operations of Kirk Homes will not be affected by the filing.

In addition, Carroll said in the release that Kirk Homes' standing inventory is significantly less than the industry average, and while under the protection provided by the bankruptcy filing, the company will complete homes currently under construction, begin new construction on recently sold homes and continue new home sales and marketing.

Construction is expected to start on any sold homes that have not already begun construction within the first 60 days of reorganization, the release said.

Kirk said Kirk Homes will also look to sell its non-residential properties at a variety of sites in Northern Illinois.

The company has requested court approval to use the cash collateral of its pre-bankruptcy lenders to fund its operations while in bankruptcy.

According to court documents, Kirk has $96.85 million in assets and $64.54 million in debt.

The company's largest unsecured creditors include:

• Donald L. Kirk of Wilmette, Ill., with a $5.7 million subordinated debt claim;

• Donald Kirk Investment Co., LLP, based in Chicago, with a $2.3 million subordinated debt claim; and

• Cole Taylor, agent to the company's ESOP noteholders, with a $1.79 million trust obligation claim.

Kirk is an employee-owned homebuilder based in Streamwood, Ill. Its Chapter 11 case number is 0917236.

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