"Holiday Blues" from Kara Homes
Posted by the Asbury Park Press on 12/17/06
"Mark File is living a "borderline nightmare."
Thinking he was only a week or so away from moving into a new home at Horizons at Birch Hill in Old Bridge, File sold his former house in June and moved his wife and two children into a hotel in Somerset.
Months later, they were still living in a hotel room because their home still wasn't ready. And then on Oct. 5, builder Kara Homes Inc. filed for bankruptcy protection, the day before his home was scheduled for a final inspection.
"It is still depressing going into the holidays," said File, 53, who is now renting a condominium in the same development where his new home stands, unoccupied.
"Sometimes, you feel, like, that you got knocked off your feet somehow," File said. "You didn't see it coming. You don't feel like you deserved it. It is not a nice feeling for the holidays."
File is among the 300 home buyers who had signed contracts and made deposits for homes that were in various stages of construction when Kara filed for bankruptcy. The company said it ran out of cash, blaming a slowdown in the real estate market."
Full article...
posted by Little_Silvered at 9:03 AM
101 Comments:
This is what happens when you buy/sell a house in a very volatile real estate market.
Homeowners are consumers and it is unconscionable that Kara Homes can get away with this. I am a prospective homeowner who has nothing left. I will go to the ends of the earth to make sure every single person at Kara Homes pays dearly for the living hell my life is now...
Blame the person responsible-Zudi Karagjozi. His lousy management is the reason that all these woes exist. Every single issue traces right back to him.
It would be great if some of the ripped-off buyers showed up in court & asked for an explanation as to why the people responsible for the Kara Homes meltdown are all still gainfully employed. It's a joke, I mean these ass-clowns are worrying about saving themselves and everyone else gets completely hosed. Zudi's mismanagement was criminal, look what he's done to all these people.
Kara dicked everyone over because Zudi was more concerned with covering his own sorry ass than with honoring commitments to his customers. He sold homes while knowing he was barely solvent at the time. He cares about one thing, the contents of his pockets & nothing more.
Zuhdi, do the right thing. Shoot yourself.
You begin to understand from this article and the comments posted above just how bad this situation is. The focus of the news articles has been on Kara's reorganizational efforts focused solely on its borrowing money to cover the payroll for Kara's employees and "workout" specialists. That to me is only a small part of the story and frankly not worth the press coverage it has been given.
At least from this outsider's view, buyers would do best to follow the lead of the buyers Peter and Judith Tiano. They have filed a motion to force KARA to relieve them of contract responsibility. This action recognizes Kara's inability to perform and the fact that declining real estate values bring into question whether buying at yesterday's price makes sense.
An additional factor buyers should consider before waiting and buying is that they are likely never going to have a source of recovery on warranty or construction defect issues.
Many buyers are not willing to file a motion to relieve them of contract responsibility unless they are assured of getting something back. The problem is there is no cash to get their deposits back...
I found this quote on someone's personal blog. It expresses a somewhat different view of the situation. If this person only knew of the disruptive situation many people face as a result of Kara's financial ineptness, I think they would change there minds.
"Couldn't think of anything to do so we drove around and looked at all the Kara homes and the Christmas lights. I want a house like those some day. They're so massive and beautiful...that's my dream home."
http://tinyurl.com/y7eguw
"Kara Homes asks court for permission to sell four developments."
SCProf, I am a Kara customer who has put down a significant deposit on one of the developments Kara is looking to sell. My contract expired in Nov, and I haven't heard anything from them. If they sell the development, is that a good thing or a bad thing for me? What could possibly happen? Thanks.
http://tinyurl.com/yhbpex
Why should Kara Homes be allowed to borrow more money? Why are they not being forced into selling off some of their assets to fund themselves? Why are they not shedding bloated corporate salaries? Why are the buyers and creditors being forced to shoulder this burden while Zudi struggles to preserve his precious brand name? Is everyone just supposed to wait & wait while Kara Homes begs for emergency loans to cover themselves? It's outrageous and unjust. Zudi is supposedly sitting on 350 million dollars worth of assets, why can't Kara liquidate some of this and put it towards getting these buyers into their rightfully purchased properties? This ridiculous fight for survival is coming at the expense of everyone Zudi ripped off and it's just a crime.
It's high time that the court starts de-prioritizing whatever is in Kara's best interests and starts prioritizing everyone else.
Kara Homes should be forced to sell off any and all undeveloped property, right now. Enough with the loans to make payroll, nothing's less important than keeping them alive on someone else's dime. Time to stop coddling them and looking out for their best interests. If Kara can't sustain themselves, shut them down.
Anon 3:06
Reading between the lines, my guess is that there simply isn't any equity in these properties for the Debtor. That is the values of all of these properties is actually less than the amount owed Magyar Bank. An obvious benefit to the bank is it gets this property quicker than it would if it went through the normal foreclosure process.
What I cannot tell without having access to the Motion is whether or not the sale is free and clear of any interest mechanics lien claimants have (assuming there are mechanics liens filed on the properties where construction has been done). That would be the way I would want it if I were the Bank. And yes if I were the Bank I would also want to be sure that the property was clear of any sort of equitable lien in favor of existing buyers by way of their deposit.
I guess what I'm saying is this "sale" isn't a particularly good thing for you. What it appears to do is to narrow your avenues of recovery. Along those lines, I remain concerned with regard to what is likely the fact that buyers are not being given "equal" treatment as creditors of this Estate. Let me explain by presenting an example.
Say you have Buyer A who put down a $100K deposit and Buyer B who did the same. Let's even have them do it on the same day. Let's have that date say be April 1, 2006 (April Fools' Day of course). Now Buyer A's home is done as of the date of the bankruptcy filing but Buyer B's home is only 80% complete. Both are in the same position at the bankruptcy closing date, that is Kara spent their deposits and there was no deposit bond out there providing a source of recovery. In essence, they are both unsecured creditors of the Kara bankruptcy estate.
So, Kara goes to Court and gets permission to sell the completed home to Buyer A. Does Buyer A get credit for the $100K deposit? If so, how is that treating Buyer A and Buyer B equally through the proceeding if Buyer B's home is never completed and eventually the construction lender forecloses? Wouldn't the proper way to handle the situation be to have Buyer A retain their unsecured claim and be required to put in another $100K at closing?
Dear SC prof,
You are so wise and all knowing. Should I get a lawyer to help me through these trouble times or should I just depend on you to freely give me your wisdom. While I know going to a true legal professional in the state that this matter is taking place in would seem prudent, I'm sure, trusting in you is the way to go. Please great and wonderful SC guide me through this difficult time.
SC
Please elaborate on buyer A and buyer B. I really don't understand the analogy completely. Sorry I'm a little slow. Can you please explain how the deposits are supose to get distributed in a situation as this one. Also, why does buyer A have to add additonal money?
thanks
Hey Anon 6:58:30 PM
Stop acting like a j/o! If you have nothing constructive or informative to add to this blog then keep your comments to yourself. The rest of us would like SC Prof to continue helping us out.
Hey anon 7:40,
Funny thing about a blog-some consider me a "jack-off", some consider SC a "jack Off", others consider you a "jack off". The reality of the situation is it's a BLOG. It's not your lawyer, it's not the court. It's a faceless nameless way of blowing off steam. If you don't want someone cutting into your little conversation with the king of bankruptcy, e-mail him, he already posted his e-mail address on another blog.
If you want to put credence in the Mr. Hand clone from Cali feel free. My problem is,I have a great deal of difficulty putting any value in an "internet expert". If you want to blindly follow someones advice, that you know nothing about, feel free to. I on the other hand prefer to slam the janitor from the west.
Anon 6:58, if you have been involved on this Blog for any length of time at all I'm sure you would have read me repeat the advice for Kara buyers to seek competent legal advice. Bankruptcy is a complicated area of the law, not well understood by a general practitioner. Wouldn't you, as a buyer, prefer to consult with an attorney where you had some level of understanding of bankruptcy law, rather than be the apparent bumbling idiot that seems to frequent this Blog all too often trying but failing to dissuade me from continuing to post my thoughts.
Anon 7:14, you are not slow. Sometimes providing examples in complex bankruptcy settings is challenging at best. I think what I'm trying to point to is that Buyer A's deposit does him some good if he is given credit for it towards the purchase price of the home. Since Buyer B's sale never closes, all he can receive is what he will get as an unsecured creditor. I just don't think that will be much.
So, if they are to be treated equally, then Buyer A should not get credit for his deposit but should get the same thing Buyer B gets through the bankruptcy distribution to unsecured creditors. Does that help in you to understand?
Soon the judge will begin to realize that everything Kara says publicly is total bullshit & he'll tire of their nonsense too. Everything is always, "soon" or, "we believe", or "hopefully". Just like it always was. Lots of promises and proposals and you can guarantee they'll go nowhere. How pathetic is it when obtaining a high interest loan is regarded as some kind of triumph of the will? What a sorry and pitiful spectacle that wheezy windbag created. Pretty sad stuff. I wonder if in twenty years Zudi is bragging about this period of his life. Somehow I doubt it.
Hey SC
Thank you. I now get it. Your are trying to show fairness to both parties. It is very tricky. I do have so many questions to ask. I know a bk lawyer is supose to answer these types of questions. The problem is the bk lawyers I've been taking to don't have the answers either. That's why we try to deciper as much as we can in anyway we can inorder to come up with a solution. It really does help. Please continue to help make sense out of all this.
Anon 7:14:31PM
Anon 9:40. Glad I can help. The situation in terms of helping people understand would be better if the Unsecured Creditors' Committee could be pursuaded to post copies (in PDF format) of the motions filed by the Debtor in this case. Newspaper reports, while helpful, leave all of us in a bit of a guessing game.
At the risk of upsetting Kara creditors, I think you need to look at the Committee's Blog (http://www.karahomescreditors.blogspot.com/ ) to see the proposed employment of additional professionals and payment of fees to Bear Stearns. I feel for you creditors. This case, in my humble opinion, is going to become a money maker for Bear Stearns at your expense. Let me see if I have this right. We BS loan the Debtor money so we can pay BS for services rendered. Comments?
Sorry, my last sentence didn't make sense. What I meant to say is:
BS loans the Debtor money @ 15% per annum so the Debtor can pay BS fees.
SC
I know what your saying about reading the kara creditors blog. I check it everyday. They don't update it very often. What do you expect from a govermental agency anyway. I also called trenton and spoke to one of the committee members. She referred me to Kara's lawyer. It's enough to make your head spin. Once again, any help is better than no help at all.
thanks for sharing.
Anon 10:44, if you are an unsecured creditor, I'd call the committee's attorney and tell him what a crappy job he has been doing keeping you informed. He is going to make a lot of money on this case potentially (hence the support of Bear Stearns because there has to be money there to pay his fees). Tell him to do his job and keep creditors like you fully informed.
He is private counsel employed by the Committee. That Committee serves as his boss. Get them on the ball by telling them to do their job, which is to represent your interest and keep you informed.
SC
Sorry I didn't check the creditors site today. I just read the updates. I see your point concerning BS making money at our expense. This is a hard call. Sometimes I'm afraid to post an opinion. I guess I look at it this way; It takes money to make more money. That was painful. From a business point of view, (and I'm not being cute) BS wouldn't take the job if they weren't getting paid. I guess Kara is a big gambler and the judge is letting it roll.
Maybe there is benefits for everyone in the end. I just don't know. Maybe I'm in denial. I try to focus on the money factor, instead of getting caught up in the emotions of it all. It's hard though. Your turn.
Thanks 11:29. Good point concerning committees consel. Their office don't correspondence very much. I'll try persuing their office. It's seems as though people involved in this case are quite spectical discussing the facts. I guess ones must keep pushing to get answers.
Anon 11:29, you make a valid point. Unfortunately I have my doubts whether the Committee's attorney will be as informative as he should be. If he were, then as I mentioned above he could post appropriate pleadings to the blog site (a very simple process is involved in FTPing pleadings up to a web server, and providing a link to them). It is one thing to get the blog poster's slant on things (which appears IMHO to be more sales oriented than information oriented), and another thing to view and read the actual motions.
Additionally and more importantly it would give you information that you can use to make an informed decision on how you think this case should be handled. I think it would also be a good idea to see a Committee that would be willing to provide a forum on its blog site where creditors like you could post your questions and let the Committee explain its (or perhaps its attorney's) view on things.
You know this whole idea of creditor discussion is new. In the past decisions relating to how a case was handled had very little creditor input. Perhaps you creditors can change things by utilizing this information tool we call the Internet to have your questions answered and your voices heard about what is best for you.
Take care,
SCProfessor
Huge Charges Hit Hovnanian
By TSC Staff
12/18/2006 6:49 PM EST
Hovnanian Enterprises (HOV - commentary - Cramer's Take - Rating) swung to a fiscal fourth-quarter loss as bottom-line results were hit by big land impairment charges and write-offs, as well as weaker demand.
The Red Bank, N.J.-based homebuilder posted a loss of $115.3 million, or $1.88 a share, reversing a year-earlier profit of $168.1 million, or $2.53 a share. The results included charges of $141 million from walking away from land deposits and $174 million related to impairments.
Revenue for the quarter ended Oct. 31 slid to $1.75 billion from $1.77 billion. Homebuilding gross margins sank to 23.1% from 26.4% as the company had to cut prices and offer incentives to move inventory.
"We did not anticipate the suddenness or magnitude of the fall in pricing that occurred this year in many of our communities," said President and CEO Ara Hovnanian in a statement. "Our profitability and the pace of new home sales in our markets continues to be adversely impacted by high contract cancellation rates, increases in the number of resale listings and increases in the number of new homes available for sale."
The company's contract cancellation rate for the fourth quarter was 35%, up from 25% in the fourth quarter of 2005 and 33% in the third quarter of fiscal 2006.
Hovnanian did say that it has seen a "glimmer" of hopeful indicators in recent months, including declines in resale inventories, improving consumer confidence and healthy levels of buyer traffic at many communities.
"We believe that the overall U.S. housing market may hit the bottom in the first half of 2007," Ara Hovnanian said. "However, the housing market is likely to bounce along the bottom for several quarters before pricing and sales pace improves."
For fiscal 2007, Hovnanian forecast earnings of $1.50 to $2 a share. Analysts polled by Thomson First Call project earnings of $2.71 a share.
The company anticipates 16,000 to18,000 home deliveries in the year, including 1,000 to 1,500 deliveries from joint ventures. In fiscal 2006, Hovnanian delivered 20,201 homes, including 2,261 from joint ventures.
Shares of Hovnanian were down $1.64, or 4.7%, to $33.61 in after-hours trading.
Source: http://www.thestreet.com/_yahoo/newsanalysis/homebuildersconstruction/10328594.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
Open Letter to Judge Kaplan:
Let me see if I have this right.
1. Kara Homes, as the result of mismanagement files bankruptcy, but still operates with it failed management staff.
2. Kara is totally out of money and finds a loan shark (Bear Stearns) to loan it money at 15% per year to operate. Conditions of the borrowing are that Bear Stearns must have its own guy (Perry) in there to run the place.
3. Bear Stearns in addition to being the lender intends to look around and see if it can pick up bank loans that are first liens on the real estate at a discount.
4. Bear Stearns is now asking to be paid for going around looking for lenders to loan Kara money so it can finish out the projects.
5. If Bear Stearns finds loans it wants more money based on its success in finding financing.
6. More lawyers are needed to help get this unknown financing in place because we wouldn't want even a small amount of money to fall out of this case and in the hands of us creditors so we have to eat up what's left with more lawyer fees.
WTF. Hey I know we got screwed by Zudi and his clowns. Now we get screwed a second time by this loan shark outfit that Kara brought in because it would save the company. Talk about getting screwed twice without the benefit of intercourse.
I found a little more information on the "sale" of the 4 subdivisions to Magyar Bank. Seems the "bank is willing to offer $300,000 in cash, and credit bid what it's owed for the properties." (See http://tinyurl.com/y3abrg). Why the additional $300K, well that is the cost of buying your peace and getting away from this protracted bankruptcy proceeding as quickly as possible. Believe me when I tell you that is indeed a cheap price to pay to get your collateral and run. Good job Maygar Bank. Give your lawyer a bonus for putting it together.
Putting this in perspective, $300K only represents 3.49% of their loan amount of $8.6M. That's a real bargain given the cost of protracted litigation where the value of the colleratal is going down quickly because of market conditions and the attorneys fees for this fight would be quite a big ticket item. Expect other lenders to follow and make the same deal shortly. If I were a construction lender I'd take the same deal in a heartbeat. Get away and get away fast.
That of course brings into play who has the rights to the $300K. Is it the Debtor, existing mechanics lien claimants, or buyers who have posted deposits?
While most of the decisions in bankruptcy involve issues that relate to application of Federal Bankruptcy law, the Court will look to New Jersey State Law on issues of the priority of secured creditors relative to real property. This of course creates the rub on the $300,000. If multiple perfected mechanics lien claimants exist, then my thought would they would be entitled to the proceeds of the sale. However sense the sale is "in bulk" a question arises how would that $300K be distributed among the claimants?
More interesting is if New Jersey has a law similar to states on the West Coast which give priority to perfected mechanics lien claimants over construction lenders, where construction commences before the mortgage is perfected through recordation. That would make things rather exciting because it could raise the issue of whether the bank or the mechanics lien claimants have priority. And what of undisbursed construction loan funds? Do they exist? Has any mechanics lien claimant filed a stop notice? All good questions and ones that may peak the interests of claimants and their counsel.
Unfortunately for buyers with deposits, their interest at best would be an equitable lien on the property and IMHO, sadly wouldn't hold up to a challenge in a bankruptcy proceeding. That of course leaves them in the position of that unfortunate unsecured creditor.
I hope this information doesn't confuse things more than they already are.
Take care all.
SCProfessor
scprof- You mentioned that Kara, upon going into BK had spent all of the buyer deposits and does not have funds to pay them back. One question: normally when buyers purchase a home pre-construction, their deposit goes into escrow, and is put towards down payment only at closing. The sponsor (Kara) should not have access to buyer deposit funds. Does anybody know whether the purchase process was set up differently? I would think that deposits would have to be released if Kara is in breach with regards to fulfilling contracts to build.
It's time for the court to stop playing nice & put an end to this silly charade. Close the failed business, sell off the assets & stop the corporate welfare already.
Anon 11:07, you have described the process here in California and that process is mandated by our State Department of Real Estate for first sales out of a subdivision (defined as 5 or more contiguous or non-contiguous lots).
As I understand it that is not the case in New Jersey. One of the points I've repeatedly expressed is if nothing else comes out of this bankruptcy, the 300 or so buyers should contact their New Jersey state legislator and get a similar law in place so this does not happen again.
reverb- i thought our deposits were being held in escrow too, but unfortunately that's not the case. i think Kara has some BS provision in their contracts that allows them to utilize the deposits for building purposes. the question becomes, did they use the deposits for corresponding homes, or did they tap those funds for general business purposes? my guess is the latter. while that probably supports a fraud case against Kara, it doesn't help us recover our deposits.
another blogger raised an important point. "Kara required by NJ law to bond deposits for all developments." can anyone confirm this is in fact the case?
wow, unbelieveable.
I saw the post on the supposed requirement for deposit bonds and asked a week ago or so for additional information. I also suggested that it would make sense for buyers to contact the attorney(s) who have already instituted claim proceedings on deposit related bonds since they have obviously taken steps towards collecting on behalf of their clients and may be able to answer this question more easily.
Prospective home buyers have put up a total of $1.71 million in deposits in the four developments, court papers state. Magyar does not want the contracts, leaving the customers to negotiate new deals to buy the homes.
"It is not written in stone," Bruck said. "It will be up to them (the prospective buyers) if they want to make a deal."
"In the meantime, Kara sales workers will contact them about what is happening in an effort to see if they still want the houses, Bruck said. "If so, then they'll talk to Magyar and they'll work out their deals. Different project buyers could agree to buy the land with the contracts, Bruck said.
A lawyer for Magyar would not comment on the proposed sale.
Bruck said homeowners with deposits have claims in the bankruptcy case. "Once we know who the buyer is, then that will be the time to address the issues of the deposits," Bruck said.
Sounds like Kara customers are going to be stuck between a rock and a hard place. You can (a) Negotiate a deal with Magyar to sell your house to you (but they would probably rather sell to someone who hasn't already made a deposit of $50K+ on the house) so they can make more profit, or (b)Tell Kara you no longer want the house because you don't know how long it will take to complete, if ever, and you've already been homeless for 6 months. Either way, these poor people are going to lose their deposit money. This is the most unjust action I have ever seen, and it seems like it is all legal.
Wow that Zudi is a business wizard all right. He found a company that found a company that might find a company that'll loan his company more money. All he'll have to sacrifice is some property he never paid for anyway. He's got it all figured out. After all he's only as strong as his weakest link. I predict within six months, he'll double. He used to be in a band, you know.
As the stories keep seeping to the surface, Zudi's sliminess will be exposed fully for everyone to see. The stories will keep coming and coming and soon his precious "brand name" will be synonymous with "rip-off" and "scam". The truth will spread and spread and it'll follow him everywhere forever. His stupid mythology and his grandiose exterior will be burst and he'll be forever known as the guy who stole people's deposits and hid behind his lawyers. The way he approached bankruptcy was typically Zudi-self centered, revolving around what suited him best, with zero concern paid to anyone else, portraying himself as the poor earnest victim to the hilt. It might all be legal but it makes it no less reprehensible and despicable. This society needs to make people like Zudi more accountable for their actions & stop encouraging his ilk by giving them handouts and catering to their greedy needs.
In previous editions of this blog I asked where the justice is too. Lawmakers just don't give a @#$% unless there is some political capital to be made on this. Just keep up the preasure and maybe something will happen and Kara's goons get investigated, indicted and convicted.
The real Zudi has revealed himself since October. Everyone always suspected he was just a big-mouthed blowhard all along & everyone was correct. He had all year to demonstrate his business genius & all he could think of was running up the white flag. They've actually accomplished more in the last two months than they did all year. Those happen to be the months where Zudi was not in full control. Coincidence?
Will any of the funding go towards finishing the clubhouses?
The motion that has been filed relating to the sale of the 4 projects is available online at:
http://tinyurl.com/ybqfb4
It is interesting reading for those of us who hold an interest in bankruptcy cases such as this. I mentioned in an earlier posting yesterday that I assumed this "sale" would be structured in a manner providing the bank holding the first mortgage with ownership of the property "free and clear" of liens and those liens would be transferred to proceeds. That appears, based upon my reading of the actual motion to be true. So, the idea is to put the $300K on the table and have Kara, the mechanics lien claimants, and the buyers fight over it. Added to this fight is Riverside Capital Management, the holder of a second mortgage on at least some of the properties.
Boy do I sense problems with this whole scenario. First of all, it makes assumptions that have not been judicially determined. That is the relative priority of the liens and encumbrances on the property. Debtor’s counsel just makes the assumption that the Bank’s mortgage is first. Yes, that might be a probable conclusion but IMHO, before this sale can get anyway close to being approved, there must be a hearing and determination of its priority over the alleged junior encumbrances. That of course is based on New Jersey State law. So, up front, we have the cart going before the course because the Bank, though this sale is being allowed to buy the property with a credit bid on its debt.
Also my sense in this is while clearly the bank could end up with this property through a judicial foreclosure and wipe out junior encumbrances, I have difficulty with this bootstrap approach, simply sidestepping State mandated foreclosure procedures designed to protect and preserve the interests of property owners and junior encumbrance holders.
This isn’t to say that I don’t think Judge Kaplan won’t buy off on this motion and allow it to go through. I’m just saying it is far from a sure thing and I think the consent of Riverside Capital and the mechanics lien claimants may be key in order to avoid their well positioned objections. Incidentally the exhibit listing the mechanics lien claimants was not part of the copy of the motion posted on the Internet so we have no idea how big they were. We do however see a characteristic approach by the Debtor with regard to these encumbrances. The debtor portrays them as being wholly without merit while of course making no such claim about the Bank’s so-called first lien. A clear indication that the Debtor is being “bought off” by the Bank through this potential $300,000 that it may get.
Again, those of you who are of a mind to like to read these sort of court filings, enjoy and post your thoughts.
Take care,
SCProfessor
SC Prof- On Monday, Kara filed a motion to pay an expense reimbursement to Bear Stearns in connection with exploring and seeking to secure a $40 million construction financing facility that would be secured by a first priority priming lien on the Debtors' assets. What is a first priority priming lien and why would the banks allow it?
Anon 7:50:
An excellent article that answers your question about a loan secured by a priming lien can be found at:
http://tinyurl.com/ynaa5j
Read the article. It should explain the purpose and answer your questions relating to what priming liens are all about. Expect secured creditors not to lie down and accept it unless they receive adequate assurances that it is going to work. Problem with this sort of blanket approach is it may work in some projects and not in others.
I sense a challenge here because while all these affiliate bankruptcies are collected together for purpose of easing the burden of administration they are still separate bankruptcies with different secured creditors. That obstacle alone, IMHO, makes this convincing the Court to buy off on this sort of priming lien a challenge.
SCProfessor
anon refering to SCProf as Mr. Hand:
Each Blog I’ve been on has at least one poster who serves the role of being a pain in the ass. As a Kara Homes buyer who has reached a point of acceptance on loosing my money because of Zuhdi or Zudi, or jerk or whatever he goes by, I’m thankful that I can look to Scprof’s postings for not only helpful understanding but reference sources I can look up to help me understand what he is talking about. I don’t need your help and advice in understanding that everything he says isn’t necessarily the Gospel truth. And I don’t need to see your stupid posts personally attacking him either. So grow up and stop it.
P.S. I emailed Scprof and told him that I was sorry about your abusive postings. He emailed me back point me to a post on wikipedia about judge Hand. He said that he viewed you calling him Mr. Hand as being a compliment in his eyes although he could never come close to being as good as that judge.
No matter how it goes or what happens to him, Zud will gain one thing from this that he'll have forever-an enemy for life. Wherever he goes or whatever he does, I'll be there, dogging his every step and stopping at nothing to remind everyone associated with him about what he did & what kind of man he really is. I will be a relentless, annoying pest & I will seize every opportunity to jab and pick and pester him forever more. Merry Xmas, Zudi!
Hey anon 11:27 the reference wasn't to judge hand it was to Mr. Hand the teacher in Fast Times at Ridgemont High. I still think your hero is no more than a cali jackoff junior high teacher. Feel free to worship at the feet of MR. HAND-I'm sure those of us that realize he is no more than a wanna be laugh at you now as much as we laugh at him.
By the way could you tell the all mighty one to stop quoting west coast BK law on a Jersey case.
To Anon 1:48 - IS that you Murphy - the constant reminder of another one of Zudi's bad choices??
To 7:01, you sound like Murphy. Who knows more about hand action than you. Don't dirty the good name of koolaid with your lousy trash talk. And Leave SC alone. He is helping out which is something you can't or won't do. Putz!
ExKoolAid:
Apparently you need a reminder that Bankruptcy Law is Federal Law. In certain specific instances (perfection of security interests for example), the Bankruptcy Judge will look to New Jersey State Law for determination of specific issues. However, the Bankruptcy Code that serves as a basis for the day-to-day decisions he makes was passed into law by the U.S. Congress and not the New Jersey legislature. The Bankruptcy Court that services my local jurisdiction sits as the same Bankruptcy Court that services your jurisdiction, applying the same laws.
Once again, nice try at discrediting my postings. To bad it is based upon an improper understanding of the nature of applicable law. I guess I should have expected as much from someone who is a fan of film classics like Fast Times at Ridgemont High. I'd suggest broading your horizons by taking a U. S. Government class at your local community college.
SCProfessor
This comment has been removed by a blog administrator.
Hey SC,
Not a fan of the movie just a quick attempt at humor regarding your strange, attraction to this case. I am still baffled as to why such a wise individual as your self cares so much about a New Jersey bankruptcy. I understand you are "just trying to help", But are you really helping? You are giving advice to people who are considering it as gospel. They don't realize it's the vague, semi-informed rhetoric that it is.
It's funny that you call me out on my knowledge of federal bankruptcy law, which I have never claimed to be an expert on, yet when someone calls you out on this specific case, which you are far from an expert on, your little cali panites crawl up your butt.
SC go on offering your free, USELESS, advice to the guilable masses, the same that followed Z into the ground. The people that trust you are the same moronic, simpletons that trusted the King Kara. It's funny how those that got screwed over by believing his line of BS trust another sideshow huckster such as yourself for advice.
SSDD
What a joke. Get off the Blog idiot.
Flash sucks.
Mr. Hand was the best teacher I ever had. At first he seemed kind of bogus, but he turned out to be totally awesome. Bitchin.
So once again a nice discussion about the crimes and incompetence of the Great Bloviator devolves into a poorly worded tinkling contest and, even lamer, an argument about who is qualified to discuss bankruptcy on an Internet blog. Looks like the company mottos should have been, "Kara Cares, But We're Easily Distracted" & "DediCATed to qualty AND Desing".
ExKoolAid (aka Anon 10:11):
Based upon the content of your posting, it is clear that there is a mental defect relating to your short term memory. If you will look at the posting Scprof made on December 8th at 2:01p.m. (10 days ago) and your typical insulting response at 9:12p.m. that same day perhaps it will help you recall why he is interested in this case. You can reach those postings by pointing your internet window to:
http://shorebubble.blogspot.com/2006/11/kara-unsecured-creditors-blog_30.html
Anon 8:18, I don’t think that this poster’s adoption of the name ExKoolAid has anything to do with the KoolAid drink mix. I think he adopted this name to remind all of us former Kara employers that he was the former (Ex) right hand man (Aid) to Mr. Hip, Slick and (Kool) Zuhdi Karagjozi. Could ExKoolAid be Hektor, dispatched here to try and remove some of the heat Zuhdi is feeling about the way people on this Blog are maligning his reputation in the community? Hey Hektor it’s a little to late to save Zuhdi’s reputation. Get back to watching another movie. Speaking of movies, I here Hollywood is planning to do a bunch of new Three Stooges movies. Maybe you and Zuhdi should tryout for one of the lead role. Hey guys, who among the inner circle would best fit that available third stooge role?
Sorry, meant to say, "I think he adopted this name to remind all of us former Kara employees...."
It doesn't seem likely that the SC prof. Basher would be Hektor, there are not enough spelling errors in his posts. Also Uncle H is more concerned now with dumping the models he got stuck owning (and no longer receiving rent on) than in defending his idiot nephew.
My guess is a lower level idiot that is still there. Maybe Phil M or Tom G.
I think the anti-SC Prof person is Robbie S. I do not think Phil M is smart enough to post to a blog. Come on, Phil M will get his day when the Tradwinds Homes start caving in on themselves.
Tom G again not smart enough to post to a blog. He is too busy trying to get into Jerry F's wifes pants. (yeah Tom we all know you have been hitting on Jerry's wife while you make him stay at work late)
If it is not Robbie than my second guess would be Shannon P (Hektors daughter-in-law and resident scank)
But she was nice to look at when you looked at the all of the other women at Kara. (You have Tracy R - nasty poor white trash chick, Sandy the attorney - how big are those hips anyway?)
I don't know who the SCProf is, But I'm glad he/she is posting another way of getting additional opinions about what is going on, I will agree with the previous posts, Phil M. not able to write a paragraph that long and keep his thoughts together and Hektor just couldn't do it period, I still don't think either one of them know that the company is in Chapter 11 BK.
Well Well
The end is near so I will take this time to thank all for your posts. Please say good bye to zudi and the gang . How long before the crew start to sell info on Zudi. How he got start up money. Is Zudi going to write a book on the rise and fall of Kara Homes. I would like to thank Uncle Hector and Robbie for killing my company.
Zudi needs to go go
DO you belive that Zudi is going to give the existing sales people 70K a year as a salary starting the New Year.
How can the BK Court allow such a waste of money. Kara can't even sell anything right now.
SC Prof, is this really legal. 70K a year for people who lied to their customers. That is just wrong.
Well, the sales people are used to making $150k to lie to people so this is a big paycut for them. I really feel bad for those guys.....
The even bigger question is why Kara Homes needs a vastly overpaid veep to oversee a sales force that isn't even allowed to sell anything right now. They could pay three or four real employees with what he takes home. It's like corporate welfare for shitty businessmen up there. You have two companies now, Kara Homes Inc. & ZudiCo. ZudiCo. is doing what ZudiCo. always did, and that is looking out for themselves at all times. ZudiCo.'s managers are devoting all their energies into trying to offload the properties that Kara Homes Inc. was bankrolling for them. Now they have actual businessmen running Kara Homes Inc., so ZudiCo. has to cut & run & dump those investments asap, otherwise they'll end up having to foot the bill themselves and we know that's not the ZudiCo. way of doing things. They only spend other people's money at ZudiCo.
Anon 5:03 said, "SC Prof, is this really legal. 70K a year for people who lied to their customers. That is just wrong."
Sorry but it isn't a question of legality. It is a business decision, which incidentally Zudi isn't making. He sits in the position of a single vote on a three member board. What decisions that Board makes, well I'm suspecting things like what is going to be served at their once a month lunch meeting. Traxi, through their CRO is making the decisions.
Now as for your comment relating to "people who lied to their customers," I'm trying to figure out why you are targeting the sales people. If there has been one consistent view on this Blog held by buyers, former employees, existing employees, subcontractors, and others, the blame for this entire sad situation rests with Zudi.
If you want to focus your writing energy on pointing blame, best to focus it on Zudi where it belongs. The real question, in terms of drawing a paycheck, is why is Traxi still keeping him on the payroll? My answer is it is a way of keeping his mouth shut and out of the way.
The Asbury Park Press posted an article this afternoon relating to the possibility that Bear Stearns may loan $40,000,000 to help complete homes. The draft of a motion relating to this is also posted by Asbury Park Press. Links to both of these are provided below. I’ll take a look at the motion and give you my thoughts tomorrow.
To view the article, point your browser to:
http://tinyurl.com/yfj9xo
To view the motion, point your browser to:
http://tinyurl.com/ymoeat
Take care,
SCProfessor
SC and the rest of the Blogger brain trust,
A few quick points:
1. The 3 member board is not yet in place and they have not voted on any of the recent changes at the firm.
2. The sales raises have not yet been part of any petition to the court. If this increase is going to be requested, the earliest it could come up in front of Judge Kaplan would be the 2nd week of January. While I for one think this increase is insane, the rationale behind it is the sales people can't collect comissions at this time, so if they don't want them to leave, they have to increase the base compensation package.
3. The anger focused at Mr. Jablonski is warranted, that at the members of his staff that remain is not.
4. I don't understand the constant attacks at Tracey Russel, Denise Carrol and others on this board. Why do the constant attacks on them hit such a personal level is beyond me. Are your lives so small and shallow that the only validation you get is from bringing down others. If you need a release slam Zhudi, he put you all where you are today. Why do you need to go after people who were like yourselves, working day to day trying to make a living. It's sad and I hope all of you that have posted these vile attacks on a personal level have the miserable holiday you deserve. Maybe if you lost the anger and tried to recover you would be employed, not sitting at home slamming people on the internet that you never would have the nerve to slam to their faces. You are all pathetic, vile trolls who deserve to be where you are, now-jobless, broke and bitter.
anon 8:11- at least a few of us jobless, broke and bitter types feel exactly as you do regarding the unnecessary and uncalled for personal attacks. I worked with a lot of fine people at Kara & I wish them the best of luck. It's too bad that some people never advanced past scribbling graffiti on the Jr. high bathroom walls. Unfortunately it's one of the consequences of Internet anonymity. Wait and see, one day the feds will shut the whole goddamned thing down & we'll have people like that to blame.
Even when it comes to Zudi and his band of merry buccaneers, it's not personal. I don't know anything about their personal lives, I don't want to know anything about their personal lives. The main target of my wrath was and is the architect of the disaster. Sure, some of his underlings no doubt played a part in this drama, but every issue comes right back to poor management and that buck stops on ZK's desk every single time. Again, it's not personal. His business, public comments, bio, quotes, those are all fair game. But about their personal lives I could not possibly care any less.
The salespeople do not deserve to be singled out as some kind of villains, they were just doing their jobs and they were screwed over just like everyone else was. It IS interesting that they still feel they need to carry the hefty salary of their sales VP, but questioning that is nothing new. I'm certainly no expert on running a company so I guess he brings something to the table that isn't always readily apparent to the untrained eye.
I have personally been dealing with Diane Carroll and she has been nothing but professional.
The courts have tied her hands, and she is trying valiantly to close the houses the courts granted KARA permission to close.
I should close by mid January or sooner, I am keeping my fingers crossed, maybe, hopefully this mess will work out for everyone.
Denise is doing her best.
No offense, but I would imagine that giving the Kara salespeople a raise would greatly anger more than a few of the other remaining employees, don't you think? Not getting any commissions would be a valid excuse I suppose, but they weren't getting them before the bankruptcy either and no one was giving them any raises then. "Insane" was a good way to put it. Maybe they ought to emerge from Chap 11 first before they go around awarding raises. If those people can find better jobs elsewhere that should be Kara's problem to worry about later IMO. It really is a pretty flimsy rationale. In a situation like Kara is in now, it doesn't seem smart to show that kind of preference towards one department but not the others. You'd think that right now a one-for-all attitude is what you'd want esp. after such a dismal year.
anon 10:45,
It's just another case of zman giving that tool Jablonski what he wants. If anyone left at the asylum has any sense whatsoever they need to have Tommy J removed from the building. What the hell he's already building a development up North with Fry and Barbosa. He even has Kara contractors working on it for him.
IT IS JUST INCONCEIVABLE TO ME THAT ZUDI IS ABLE TO MANAGE TO KEEP THIS WHOLE SHARADE GOING. I HEARD THAT HE SAID BY THIS TIME NEXT YEAR HE WILL HAVE 5000 LOTS TIED UP. WOW THAT IS PRETTY IMPRESSIVE FOR A GUY THAT STIFFED US ALL OUT OF PAY AND VACATION PAY. I WOULD BET THAT ZUDI AND HIS FAMILY ARE COZY AROUND A BIG TREE WITH LOTS OF TOYS FOR THE KIDS...I AM SURE THAT THIS DOWN TURN HAS NOT AFFECTED THE CHILDREN AT ALL.
I LOVED WORKING FOR KARA. I DID NOT WANT TO LEAVE,BUT WHAT CHOICE DO I HAVE.............NONE.
I WAS PROMISED I WOULD HAVE SECURITY, ETC........WHAT A JOKE. AS USUAL , IT WAS CALLED AND SAID "no
/PLAIN AND SIMPLE.
I agree that it is wrong to pay sales people 70K a year for not doing anything. As a contractor owed money by Kara and now considered a Unsecured Creditor I want the money going to the sales people going to pay off my invoices.
You have sales people that out right lied to homebuyers about the stength of the company and they are making 70K!!! People bought houses 2 weeks before filing BK and the sales people had no clue, come on I was on site everyone was talking about when they were filing.
As far as the attacks on employees what the hell, the internet is fair game and to that idiot that said the goverment will shut this down in the future, you are an IDIOT. The internet is a global arena. It is never going to be shut down you moron.
I have never met Denise but I have had dealing with that Tracy person everyone keeps talking about. She was not a nice person and I worked with Fry when she was banging him up north while married. I remember Fry telling me she was crazy in the sack. He said she was the only girl he ever had that took all 3 routes if you get what I mean.
Happy Kwanza everyone!!!
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Re: anon 12:07
sarcasm
noun
witty language used to convey insults or scorn; "he used sarcasm to upset his opponent"; "irony is wasted on the stupid"; "Satire is a sort of glass, wherein beholders do generally discover everybody's face but their own"
Merry Xmas!
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cant we all just get along 'til tuesday??
No we can not get along. I have money owed me for work on homes that were closed in August so what do I have to be happy about , Christmas Sucks for my FAMILY thanks to Zudi & Kara Homes I Drove by zudi's house it does not look like a persons home that has just Fucked a lot of people. He has the house all Decorated Lights the works Christmas tree in window of conservertory looks nice it does not look as tho Zudi and his family are lacking anything for christmas.Zudi is having one of his famous partys Talk is he is having sales and the remaining employees to his home to give out new years Thank You envelopes. so make sure you ask Robbie what time to be at Zudi's.
I was told if you can not make it ask Zudi for your envelope he wants
to thank all for staying with the
company till we go Belly up. I might ramble but its like everyone else I was ok till I started working for Kara. It was a great Company back in 2000 before Tom G, Bruce L,
Mike O,Rob P, Hector P, Robbie S, George B, and all the other clowns that blew smoke up Zudi's Ass. We all thought Zudi was smarter then that.Zudi made 30 million at old bridge alone in 2002 what happened are the houses going to be standing in the year 2010 I hope so Maybe we all need to be like Phil M and just do it..
put it up we wwill fix it later I See Nothing I NO Nothing with that attitude you can become vp look at Phil M. My regards to all Happy Holidays. IN GOD I TRUST THIS TO SHALL PASS AND GOD WILL PROVIDE.
There are people worse off..
You can just feel the love here!!!!!!
Oh and to the person posting about Tracy, you are so right!!!! She is a dirty girl. Have you ever been by her house it looks like a tenament. She is poor white trash personified. Oh yeah, ask John K about how kinky she is, he will tell you. I did not know that TR's little boy is John K's son.
She she is a slut. Someone should email this blog to TR's huband along with the old blogs. I wonder what he would do to know if wife sleeps around and is a slut?
Merry Xmass
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Looks like the mad poster is back!!!
Either that or it is TR trying to hide her infidelity!!!!!!
The application for upfront fees filed by counsel for the Debtor to pay $75K to Bear Stearns (BS) is for the purpose of paying the costs associated with its due diligence allegedly designed to provide necessary information to possibly make a $40,000,000 priming loan to cover some of the completion costs on the 300 homes out there that have buyer contracts.
The description of the $40,000,000 is vague at best and there is a lot of “maybe” surrounding it but enough fluff that its potential fruition will undoubtedly cause the Judge to approve this motion. The reason is that he has already approved the $2.6M loan. That loan was designed to meet payroll obligations for, if my memory serves me correctly, something like eleven or thirteen weeks. Burn rate was something like $70K to $90K a week. So, what we are talking about is one week’s worth of expenses, used up, to do the work that will potentially bring in $40,000,000.
Bank of America (and apparently many of the other construction lenders) has filed objections to this funding. BofA’s claim is “the $75,000 payment to Bear Stearns would eat away at what little operating money Kara has left. ‘If it has an interest in providing construction financing, Bear Stearns, not (Kara's) estates, should bear the cost of analyzing the benefits Bear Stearns will derive from providing such financing.” [see news article at http://tinyurl.com/y8kc3o ]. Yeah, BofA may be right, but is BS had lent $75K less than it did, wouldn’t we be in the same position?
Now if I were the Banks, I’d be using an entirely different approach. I’d be claiming that what is really going on here is BS is seeking to make a killing at the expense of secured creditors. BS pervious admitted goal was to purchase secured claims at a discount. By bringing forth the concept of making a loan that would be entitled to a priming lien that effectively pushes lenders out of their first priority secured position, it will result in an overall impairment of their security. This potential threat is being used, not to reorganize this Debtor, but to “pick the pockets" of the Estate’s secured creditors.
In any event, my sense is the Judge will approve this $75,000 deal. In the scheme of things, at worse it will shorten the Debtor’s business life by one week. At best, well it is going to make BS a lot of money while it allegedly continues that glimmer of hope for unsecured creditors that there will be a pot of gold at the end of the Kara rainbow.
One final point that seems to have everyone up in arms. That is the payment of pre-petition wages to existing employees. Now I’m not saying this is good or bad. Seems to me it increases the “burn” rate and shortens the Debtor’s business life. But let’s face it, the Debtor is just pooping along and most of these people that would get paid, with the exception of Zudi and his inner circle, well I’d rather see them get it than BS or Traxi.
Having said that, probably the best way to kill the Motion is by pointing out to the Court that it wasn’t mentioned in the Unsecured Creditor’s Committee Blog. Reason for mentioning that is that the Blog is now Court sanctioned. That is, as stated in the Blog, relating to a December 11th hearing:
“2. Motion for an Order to comply with Section 1102 of the Bankruptcy Code: This motion was granted without objection. The motion provides for the establishment of this website and the posting of information relevant to the bankruptcy cases for general unsecured creditors to access and for the Committee to fulfill their duties and obligations.”
Now if it were me, and I was an unsecured creditor, I’d request to speak to the Court when the Motion for payment of these pre-petition wages is called, and show “shock and dismay” at its existence on the Court’s calendar, since no mention of this item was contained on the Court sanctioned website of this hearing which is clearly “information relevant to the bankruptcy cases for general unsecured creditors.” That fact alone would probably give the judge reason to continue the motion until ample notice has been given via the website of this motion. And also, while you are up there standing before the Court, see if you can get the Court of order the Unsecured Creditors Committee attorney to post links to the actual motions (in PDF format). That would really help creditors to be able if they choose not to just accept the “summary’ provided by the Committee’s spokesperson on the Blog, to reach logical conclusions based on the actual motion.
Take care,
SCProfessor
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Stop, Trace.
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I find it rather offensive that the "blog administrator" finds jibberish postings more offensive than unfounded personnel assaults. What a fly-night BS (not Bear stearns but rather BULL SHIT) job is being done by the moderator of this blog. Who ever is running this forum is as much of a piece of whale crap as those that are attacking people personally.
Moderator, can you please post the IP address of the person posting all of the junk. Than let us take it from there.
NICE... Internet justice :-)
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