In an effort to climb out of what has become an almost inescapable hole, one of the largest contracting companies in Maryland was granted an emergency hearing today in its request to pay pre-petition wages, payroll taxes and employee benefits.
“This case is indicative of the current economic climate,” said Caruso Homes? attorney Joel Sher. “[The company] is a victim of events that started to unfold in 2006 at the beginning of the credit crisis.”
The company has filed for Chapter 11 bankruptcy, allowing for reorganization to keep the business alive and pay creditors over time.
Increasing calls for help are being heard from companies with otherwise successful track records, as national business debt filings have increased by 40 percent this year to 30,741 from the 21,960 filed in the 12-month period ending March 31, 2007.
“We?re in such a deep hole that we can?t climb out without a financial solution,” said Jeffrey Caruso, chief executive officer of Caruso Homes, winner of the 2006 Better Business Bureau National Torch Award for Marketplace Ethics.
But with late payments on home-equity loans at a record high, and delinquency rates on loans for cars, small businesses and construction spiking to levels not seen in a decade or more, according to the Federal Deposit Insurance Corp., Caruso, 47, had no choice but to ask for help.
“It?s important that we take care of our customers and let them know we are still building and selling houses,” Caruso said.
Unlike last year, when soaring mortgage defaults sparked a crisis of confidence in the financial system, the root of these problems is the downturn in the broader economy. Consumers and businesses are strapped for cash with job losses growing and retail sales falling, said Mark Sammons of the United States Bankruptcy Court for the District of Maryland.
The total debt of Caruso Homes is $106 million, with $79 million in bank debt and $17 million in investor debt.
