Keiser creditors left holding empty bag

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DRIVER INSTRUCTIONS — The gates remain locked at the former Keiser Homes company on Mechanic Falls Road, although the sign for drivers remain.

OXFORD — Eight months after Keiser Homes, a division of Excel Homes, shut down without warning leaving 120 employees without a job, the company remains in bankruptcy court and many – if not all creditors – remain in limbo.

GROUND KEEPING — The grounds at the former Keiser Homes are still maintained as the future of the empty company headquarters on the 24-acre property remains uncertain.

Innovative Building Systems LLC (IBS) ,the parent company of Excel Homes of Maine LLC, filed a voluntary petition for relief in the U.S. Bankruptcy Court in Delaware under Chapter 7 on May 11, 2016. This came a week after it shuttered its 61,000-square-foot facility on Mechanic Falls Road and began moving half-built modular homes from its warehouse and yard.

Employees were left speechless, without their jobs, and hundreds of local area businesses and individuals were left with unpaid bills for services rendered or lost deposits on homes being built.

According to IBS court filings, Excel Homes of Maine LLC officials believe that after any administrative expenses are paid, no funds will be available for distribution to unsecured creditors.

The company lists its estimated assets between $1 million and $10 million and its estimate liabilities between $10 million and $50 million, according to financial documents filed in U.S. Bankruptcy Court, where the bankruptcy case is being heard.

Financials

According to the company’s Statement of Financial Affairs filed with the bankruptcy court, Excel Homes of Maine lists its gross revenue for the year Feb. 1, 2014, through Dec. 31, 2014 as $17,171,975. By Jan. 1, 2016, the gross revenues has decreased to $4,450,070.

Employees at Excel Homes/Keiser Industries insisted the IBS financial  problem was not caused by the Oxford plant, even though the Keiser Homes property lost $545,726 in materials and tools during a fire at the plant in 2015. According to court documents, the plant received more than  $1.9 million from the insurance carrier to cover lost property, cleanup and business interruption.

At the time of the shutdown, employees said production at the plant was active and there was a long backlog of orders for homes.

Outstanding bills were being paid by Excel Homes of Maine for materials, utilities, haulers and other items through the end of April 2016, according to court documents.

Court documents also show that there were payments or other transfers of property amounting to $1.9 million made within one year of the bankruptcy filing that benefited so-called “insiders.”

They included $265,609 to Philip Hickman, president of of Excel Homes of Maine, for expense reimbursements.

The company also was facing legal actions by multiple entities before the bankruptcy claim was filed. The cases included one currently in the Superior Court of New Haven, Connecticut, by a construction company which claims Keiser was responsible for causing damage to a bridge in Connecticut; a suit filed in Massachusetts for late payment on invoices for services rendered; breach of contract filed by a carpentry company also in Massachusetts and so on.

Some paid

The list of creditors in the Excel Homes Maine case exceeds 4,500, including hundreds of local area businesses and individuals in almost every local area town.

DRIVER INSTRUCTIONS — The gates remain locked at the former Keiser Homes company on Mechanic Falls Road, although the sign for drivers remain.

The list includes the town of Oxford, Oxford Water Department, Double T Fence in Oxford, AAA Fire Extinguisher Company in Auburn, Atlas Supply Corp in Lewiston, Aubuchon Paint and Hardware in Norway and hundreds more.

Some weathered the storm better than others.

In Farmington, the third phase of a major $1.54 million housing development was about to be built last spring using Keiser modular homes. The news of the closing was a shock to was the board of directors of the 82 High St. project, according to the directors chairwoman Janet Smith.

The 82 High St. project was slated to remove three aging apartment buildings and replace them with three modular buildings, containing four apartments each constructed by Keiser Homes.

The group had received a $500,000 grant from the Federal Home Loan Bank and a $540,000 loan from Franklin Savings Bank earlier last year and had hoped to break ground in the spring and open the new housing in November 2016.

A down payment on the Keiser buildings was made to Cousineau Inc. of Wilton, the local Keiser Home dealer.

With the assistance of Cousineau, the project was continued with another home builder and the homes are about ready to open, Smith said.

“They stuck by us through the project to meet the timeline,” she said last week. “We really didn’t want to keep people in those old buildings for another year.”

The town of Oxford has received some money from Keiser Real Estate, including $368.48 for water from the town of Oxford from May 26, 2016, to Oct. 27, 2016.

A total of $21,277.46 for real estate taxes from July 1, 2016, through Dec. 31, 2016, was also received. Keiser Real Estate LLC and its taxes are paid up to date, Town Clerk Elizabeth Olsen confirmed late last week. According to municipal tax records, the building is assessed at more than $3 million.

Many others, like Aubuchon Paint and Hardware in Norway, have attorneys  dealing with the proceedings.

Process

Bankruptcy is often a complicated process, and in this case, further complicated by the number of companies involved, the amount of assets and the number of secured and unsecured creditors.

Generally speaking, a Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in Chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. A “cure” date is established to “cure the delinquency” and bring all payments current.

In this case, thousands of pages of documents have been filed with the U.S. Bankruptcy Court in Delaware. The case was so extensive that the Excel Home/Keiser Industry case was consolidated for joint administration under the Innovative Buildings Systems LLC case because of the number of debtors who petitioned to be heard in the same court.

Eleven cases, including Excel Homes of Maine, were consolidated under the Innovative Building Systems LLC case.

The IBS Excel Homes division purchased Keiser Homes machinery, trucks, trailers, equipment and customer list, and had an option to buy the 24-acre site on Route 121 in 2013 from R.J. Findlay & Co. of Milford, New Hampshire, which bought Keiser Homes in 2009.

Keiser, Excel Homes and Innovative Design & Building Services brand modulars were built out of the Oxford location.

IBS operated similar businesses in Virginia, Indiana and Iowa. All 12 companies were included in the Chapter 7 bankruptcy filing.

According to the IBS website at the time, Innovative Building Systems was the largest custom modular home builder in the United States, operating five factories and employing some 800 workers, under several brands, including Keiser Homes. More than 28,000 homes were constructed at the factories  each year, according to the company’s website.

In May of last year, production ceased at all of IBS’ manufacturing plants when IBS filed for bankruptcy.

The court early on named a trustee for the case and assigned what is called the “Maine Lease” through a “Stalking Horse Agreement.”

The agreement allows a bankrupt debtor to test the market for the debtor’s assets in advance of an auction of them to maximize the value of its assets or avoid low bids. Champion was named the Stalking Horse Purchaser for the Sale Transaction in August 2016.

On Aug. 9, the assigned trustee filed a motion to approve a bidding procedure to sell the debtors assets. By Sept. 12, the trustee determined no qualified bids had been submitted by the bid deadline. The auction was canceled and Champion was declared the successful bidder.  On Sept. 30, Champion Modular, a designee of Champion, consummated the sale transaction with the trustee.

Keiser Real Estate has also been active in the early court proceedings.

The New Hampshire company leased Excel Maine the commercial real estate at 56 Mechanic Falls Road that, in part, allowed Excel Maine to purchase certain personal property assets from Keiser Industries.

Excel Maine had issued a promissory note in the amount of $250,000 to Keiser Industries at that time. Keiser Industries acknowledged and agreed that its rights to payment and performance were subordinate to all Excel Maine’s secured creditors.

On Aug. 19, Keiser Real Estate filed a proof of claim in the amount of $363,390, including the $250,000, plus interest, plus other outstanding debt.

Adversary proceedings were begun and by December an agreement had been reached that Champion Modular would pay Keiser the cure amount of $78,980 to Keiser Real Estate and agreed to reimburse Keiser for payments to third parties including the town of Oxford.

U.S. Bankruptcy Judge Kevin J. Carey ordered on Dec. 9 that Keiser Real Estate be approved for an allowed general unsecured claim against Excel Maine for $280,518 and dismissed the adversary proceedings.

Future unclear

It is unclear how many months – or even years – it will take to resolve the bankruptcy case but Keiser Homes of Maine LLC continues to keep its status as a Maine corporation up to date.

VACANT — A “no trespassing” now sign greets visitors to the main entrance of the former Keiser Homes headquarters on Mechanic Falls Road.

It filed an annual report on Nov. 18. It lists a registered agent and Edward K. Keiser, manager.

“The filing allows them to retain their LLC status, which provides some legal protections,” said Kristen Schulze Muszynski, director of communication, with the Department of the Secretary of State.

The corporate status has nothing to do with the bankruptcy filing, she stressed. “They are not related.”

Many employees were able to get new jobs, some at other area modular building companies such as KBS Building Systems in Paris and Schiavi Custom Builders in Oxford.

A few have faced a second lay off in 2016 when KBS had its seasonal shutdown of its Waterford plant.

The expansive grounds at 56 Mechanic Falls Road continue to be maintained and the front entryway light still shines on a “no trespassing” sign taped to the door.

ldixon@sunmediagroup.net