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Orleans Homebuilders files for bankruptcy

Orleans Homebuilders, a Pennsylvania-based housing developer has filed for bankruptcy under Chapter 11. Orleans had $440 million of assets and $498.8 million of liabilities as of December 31. Jeffrey Orleans, Chief Executive, said the company is looking for a buyer through a negotiated sale or court-supervised auction. The company’s revenue dropped by about two-thirds over the last three years — from $1 billion in 2006 to $322 million in 2009. The company defaulted on a $350 million credit facility last month after failing to get an extension of maturity of its debt. Orleans said it had $311 million of cash borrowings outstanding, excluding letters of credit. Orleans joins a long list of real estate companies that have filed for bankruptcy so far. “There’s been an enormous bubble in commercial real estate, and it has to come down,” said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog that monitors financial bailout. “There will be significant bankruptcies among developers and significant failures among community banks.”