Builder - December 2008 - (Page 35) UPDATE F IN A NCI A L M A N AGEMEN T & OPER AT ION A L S T R AT EGIE S ■ BUSINESS 38 Inside: Stormy Times The global reach of the economic crisis may aff ect builders for years to come PLUS MORE > > EDITED BY ETHAN BUTTERFIELD THE BUSINESS OF CREDIT Calling the Shots Strapped for cash, banks put the squeeze on builders. U roy scott ntangling business partnerships with banks is a messy, expensive, and painful process, as Thomas Dobron, CEO of Innovative Communities, knows all too well. Dobron liquidated his fi rst home building company, Sunland Communities, in the wake of the 1990s California real estate bust and is now preparing himself to shut down Escondido, Calif.–based Innovative Communities. “The future for Innovative Communities is very bleak,” Dobron says. “It won’t even go to Chapter 11; it’ll probably go straight to Chapter 7, to liquidation.” Once a diversified builder and land developer doing business in California, Arizona, and Nevada, Innovative recently laid off all but one member of its staff of 86 employees and is currently just treading water. The company is no longer building in any of its 15 projects, leaving neighborhoods half-built after banks shut off its access to credit. Dobron would like to come back with a new home building company during a future housing rebound, as he did after Sunland failed in the 1990s, but times have changed, he says. Whereas banks were still lending money in the early ’90s, they either don’t want to or can’t make new construction loans in the face of the current economic crisis. In dire straits themselves, some banks are forcing builders into bankruptcy and taking possession of the companies’ assets in order to protect the banks’ investments and their own solvency. If a company’s (see page 36) principals signed W W W.BUILDERONLINE.COM de c e m ber 2 0 08 BUILDER ■ 35 http://WWW.BUILDERONLINE.COM
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