Neumann Homes Inc., a large homebuilder in Chicago, Denver, Detroit and Wisconsin, is filing for Chapter 11 bankruptcy protection because of the slump in housing markets.
The company said late Monday that it had been unable to secure adequate funding to operate its business and had closed its sales, production and customer service offices. It said it has laid off most of its employees, but did not give a number.
Chief Executive Kenneth Neumann blamed the situation on a "significant downturn" in housing markets in Detroit, Chicago and Denver.
"Even after the significant help we have received from our lenders this year, the company can no longer weather this storm," he said in a statement.
Neumann Homes expanded to the Detroit area in 2005 by buying Tadian Homes, an acquisition that made it the 35th-largest U.S. homebuilder at the time. But that market has been hard-hit since by auto industry layoffs, and the company said the move has cost it more than $60 million.
This year, the housing market nationwide has been battered by a steep drop-off in both price and demand.
Steven Hovany, president of the consulting firm Strategy Planning Associates Inc., said Neumann fell victim to an overaggressive and mistimed expansion into new markets. "As a result, they've got a lot of projects and few sales," he said.
Neumann has 15 active developments in the Chicago area, mostly in distant suburbs such as Antioch, Grayslake and Oswego.
