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The Wizard
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Joined: 22 Feb 2008
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Barratt American Homes on verge of collapse
PostPosted: Wed May 07, 2008 5:04 am Reply with quoteBack to top

The housing recession appears to have damaged the financial standing of Barratt American, a private builder based in Carlsbad, CA. More than 40 civil lawsuits, many from subcontractors suing over failure to pay, have been filed against the company in the last six months.

Barratt American cannot afford to pay off the subcontractors, which include drywall and concrete companies, because of a credit crunch that has left banks unwilling to make loans ---- especially to companies with significant exposure to the housing downturn, said Michael Pattinson, president and one of the company's owners.

Barratt American is forced to turn to London in hopes of securing foreign investment so it can pay off the outstanding bills, Pattinson said. The builder was originally a British company, starting an American division in California 28 years ago. Barratt American is now an independent entity.

"The story here is that the U.S.-regulated banks are basically getting out of home building as quickly as they can, and to the maximum extent that they can," Pattinson said. "And so we're getting proposals for capital not only for U.S., non-bank sources, but from overseas as well."

Civil suits regarding contract and payment disputes are fairly common in the home building industry. However, about as many lawsuits have been filed against Barratt American in the last seven months as were filed in the seven years previous.

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