Friday, April 25, 2008

And The Dream Is Over

Personal loan guarantees. Not so smart.

After months of wrangling with lenders over huge debts accumulated during the housing boom, prominent Sacramento-area home builder John D. Reynen filed Wednesday for personal bankruptcy protection.

Reynen, co-founder of Reynen & Bardis Communities, took the action to prevent San Francisco-based Bank of the West from seizing his house and other personal assets for a $26 million debt owed by his company, said Michele McCormick, spokeswoman for the builder.

On Wednesday, McCormick characterized Reynen's personal bankruptcy filing as a necessity that allows the company to continue its restructuring efforts with its lenders. She said all the firm's creditors have agreed to equal shares of Reynen's personal assets as a condition of trying to work out a financial solution to his company's debts.

"However, the fly in the ointment is the Bank of the West action to personally take attachment to the personal assets of John Reynen," McCormick said.

In court filings, the bank asserts that John Reynen and company co-founder Christo Bardis personally guaranteed more than $750 million in loans to various lenders and have failed to pay them. That means lenders have the right to seize their personal property.


Reynen's bankruptcy court filing estimates the number of creditors at 1,000 to 5,000 and puts his personal assets at between $50 million and $100 million. It estimates his liabilities between $500 million and $1 billion.