Bankrupt builder asks court to allow insurance

T.H. Properties L.P., the Harleysville home builder that filed for Chapter 11 bankruptcy April 30 after abruptly ending operations, has asked for permission to allow its lenders to finance insurance coverage for its 12 projects in Pennsylvania and New Jersey.

In a filing in U.S. Bankruptcy Court in Philadelphia late Wednesday, lawyers representing co-owners Todd and Timothy Hendricks said Westfield Insurance Co., of Columbus, Ohio, had notified them that coverage would end yesterday for nonpayment of a $82,999 premium due March 31.

Because the company, also known as THP, is not currently operating, the filing said it had no other sources of funds to pay $111,528 needed to ensure insurance coverage through June 22. If the court approves, $154,836, or 150 percent of the premium needed, would be advanced by lenders as a lien on their own collateral.

"Blanket" insurance policies such as this one typically cover "builders' risk" - liability for someone hurt on site, workers' compensation, errors and omissions, fire and casualty coverage for sales offices, model homes and speculative units, and fidelity bonds.

On Monday, Bankruptcy Judge Stephen Raslavich granted THP a 30-day extension, to mid-June, to file schedules required for Chapter 11, such as lists of assets and liabilities, a statement of financial affairs, a schedule of current income, and a list of equity-security holders. That information is typically due within 15 days of a petition filing.

Last Friday, THP amended its filing to show debt levels between $100 million and $500 million. The company originally reported its indebtedness at $10 million to $50 million, but building-industry sources maintained last week that the amount was closer to $150 million, with $100 million owed to 18 lenders and $50 million to subcontractors and suppliers.

Complaints from THP customers have been fielded by the Pennsylvania Attorney General's Office's Bureau of Consumer Protection in Harrisburg since the company ended operations April 20.

Attorney General's Office spokesman Nils Frederiksen said that the bureau continued to receive complaints daily and that the office was "actively" monitoring the bankruptcy process.

Though it is department policy not to discuss specific numbers, Frederiksen said the volume of calls and e-mail had been "substantial, with a smaller number of formal complaints."

He recommended that THP customers provide as much information as possible concerning their dealings with the builder by filing formal complaints; a form is available at http://go.philly.com/PaComplaint.

John Clancy, who put a $5,000 deposit on a $180,000 house in THP's Northgate development in Pennsburg, said he had obtained the paperwork and would file a complaint. He said he had spoken to a THP representative before the bankruptcy filing and had been told that it was not certain he would get his deposit back.

"I really don't know where we are," Clancy said.

A major THP creditor, Haines & Kibblehouse Inc., of Skippack, denied that it was interested in buying THP.

Spokesman Anthony E. Jeremias said the company, a construction contractor, met with THP several times about what it was owed and would "continue to work directly with THP to find a creative means of working through their financial difficulties."

In its bankruptcy petitions, THP said it planned to fulfill its obligations to buyers and complete the units in its 12 projects, as well as restructure debt on other properties in the hope of developing them in the future.

THP acknowledged, however, that "due to limited resources and the overall economic climate," it would focus only on current projects.

The builder warned that "other THP entities may find it necessary to file for Chapter 11 as events unfold." That may include THP's ancillary businesses, Hendricks Title and Hendricks Mortgage.

At its peak, in 2005, THP, founded in 1992 by the Hendricks brothers, delivered 600 houses and had more than $170 million in revenue.