'Emotional' creditors confront Regency chief Customers, suppliers, contractors tell impact of builder's bankruptcy

August 29, 1998|By Robert Nusgart | Robert Nusgart,SUN STAFF

One by one they stood in line to look Regency Homes President Frank V. Mazza in the eye and tell him how his now bankrupt company had disrupted their lives.

More than 100 home buyers, suppliers, contractors, attorneys and even former employees filled a courtroom gallery in the Federal Courthouse downtown yesterday morning in the first creditors' meeting arranged by the trustee handling the Chapter 7 bankruptcy of Regency Homes Inc. and other entities working under the Regency name.

The room was filled with signs of frustration, anger, skepticism, sadness and remorse as Mazza, Chief Financial Officer Robert E. Grove Jr., and attorney Alan M. Grochal answered questions from Zvi Guttman, trustee for the case, and then from those affected by the demise of Regency.

Upon leaving the grueling two-hour session, Mazza, who started the company in 1986, said, "It's been a pretty emotional day. It makes me want to cry."

Earlier this week, a tentative agreement was reached between Guttman and Washington Homes Inc. to purchase the assets of Regency for $25.5 million. That agreement is subject to final agreement and court approval. Joel Sher, the attorney working on behalf of the trustee, said that the motion and letter of intent will be filed early next week. Guttman hopes a hearing will be scheduled for late September or early October.

But the news of an agreement did little to appease homebuyers and creditors.

"Like you care," said Debbie Impallaria, owner of City to Suburban Cleaning, as she emotionally pointed to Mazza, sitting at a table across from the courtroom podium.

Impallaria, who said she is owed $50,000, ran her Glen Burnie business with her husband and daughter. It was her company's job to clean model homes as well as those being turned over to new owners.

"That's how much I was an idiot for," said Impallaria. "You have to do a lot of work to get that kind of money being a cleaner."

Impallaria said her company had worked for Regency for four years and that despite earnings that "were in the six figures," the losses to Regency essentially wiped out most of her company's profits.

"I just got my house payments caught up. We had no money," said Impallaria, whose company is an unsecured creditor. "We ++ had nothing coming in for three or four months. Regency had owed us all this money. They kept promising that the check would be there."

Regency, once the largest private homebuilders in Maryland, filed for bankruptcy in July after an agreement for Atlanta-based Beazer Homes USA to buy the company for $41 million fell through after creditor objections. In testimony yesterday, Grove said Regency had liabilities of $64 million -- including $1.5 million in depositor money -- and just more than $50 million in assets. Among the assets are 400 lots, 200 of which were in various stages of construction.

Then there was Tom and Lori Messegee, who brought their infant son Blake to the courthouse.

The couple had moved from Colorado and had entered into a contract to buy a Regency home in Virginia last April, about the same time that Mazza was actively looking for a buyer for the troubled company.

"You can break this contract and I can't!" Lori Messegee told Mazza, holding the contract in hand. "I just want the home in a timely manner."

And then there was Sharon Costello, whose home in Springhouse Station near White Marsh was "95 percent" done, but cash-strapped Regency was unable to pay for the final grading on the lot and couldn't deliver the home.

Costello's attorney, Gary R. Maslan, said his client was willing to pay $5,000 out of her own pocket to finish the lot, but Regency was unable to make the transaction. Now Costello's furnishings are in storage, and her mother, who had sold a house in New York to come live with her, is in limbo.

"It appears that the trustee is sympathetic to her particular situation," Maslan said. "Hopefully, they will accommodate her particular problem. That's our hope."

But holding out little hope of being paid was Thomas P. Kerley, whose company made Regency's signs and who is owed close to $100,000.

"I wasted my time coming up here," Kerley said after the two-hour meeting was over. "I think the bankruptcy court would do a better job of taking care of these homeowners."

Earlier Kerley said: "We'll be lucky to get pennies on the dollar. I'm not going to go out of business -- I refuse to do that. But I'm going to have to cut short vacations. I'll be married 30 years next month and there will be no trip.

"Too many people got hurt all the way down the line. There are [subcontractors] who are losing their whole livelihood."

Pub Date: 8/29/98

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