The George L. Schnader Jr. real estate development company, which has filed for protection from creditors, has seen hard times in the housing industry before.
The 1974 slump in the market hit the company hard.
The Schnader company, founded in 1951, went from 60 employees in early 1973 to 12 by the end of 1974.
George Schnader, then the president of the Home Builders Association of Maryland, said it was the worst year in the history of the housing industry. He and the association were also fighting no-growth sentiment from residents in Baltimore and Anne Arundel counties.
Two decades later, the company is facing troubles again.
A year ago this week, Schnader died at age 66, leaving the business to his son, George Schnader 3rd, who is 29.
Now the company is waiting to see if it will be one of the fortunate developers to come out of bankruptcy to continue building.
On Wednesday, George L. Schnader Inc. filed under Chapter 11 of the Federal Bankruptcy Act, listing assets of $16.7 million and liabilities of $15.2 million.
The liabilities include a $7.5 million loan from First National Bank of Maryland, a $5.7 million loan from American National Savings Association and $1 million owed to Maryland National Bank. In all, the company listed 164 creditors.
"We needed breathing room from lenders," said Howard A. Rubenstein, an attorney representing the company. "One of the lenders was getting edgy. The lender was about to notify tenants to pay rent directly to them."
Rubenstein declined to identify the lender.
The company employs about 15 people and develops, builds and manages town houses and apartments, Rubenstein said. Currently, Rubenstein said, the company is managing at least four apartment or town-home complexes with more than 330 units in several areas in Maryland.
In 1989, the company purchased 56 acres in an Elkton development called Turnquist. The project was to include 476 apartments. So far, 120 garden apartments have been built on six acres. The remaining 50 acres have not been developed because the company can't get the financing to finish the project, Rubenstein said.
In 1991, there is little enthusiasm on the part of banks to lend money to developers.
"We are paying interest on land that can't be used because they can't get construction money," Rubenstein said. "And, who knows when construction money will be available."
Rubenstein said the company may have three options: to sell the land, to find a partner that can get financing or to continue trying to secure its own financing.