The collapse of Regency Homes Corp. and its parent Regency Corp. has left a trail of hundreds of unpaid creditors ranging from roofers and electricians, bankers and investors, newspapers and even the downtown Center Club.
Also affected are 230 homebuyers from Maryland and Virginia who were identified yesterday by the Maryland Insurance Administration. The homebuyers had contracts with Regency to build homes in Maryland and Virginia.
Regency filed for Chapter 7 liquidation in U.S. Bankruptcy Court yesterday, one day after a similar filing by its homebuilding subsidiary, Regency Homes. The companies listed both assets and liabilities as between $50 million and $100 million, but specific amounts have yet to be filed.
According to Thomas P. Raimondi, associate deputy insurance commissioner, attorneys for Regency supplied his office yesterday with the names of homebuyers who had paid deposits ranging from $2,000 to $42,000.
As of yesterday, Raimondi had not totaled the deposits and was unsure whether the $500,000 bond Regency had posted in March was sufficient to cover the deposits.
"Next week, I am going to write to everybody and ask them to send in their contracts and their [canceled] checks," Raimondi said, adding, "I have a lot of work to do." Raimondi also urged buyers to write his agency.
One buyer, Gregory R. Lazzaroni, had hoped to move with his wife and 18-month-old son this spring from their Owings Mills townhouse into a $269,000 single-family Regency home in Springhouse Station near White Marsh.
"My wife and I heard about this and we were a little depressed," said Lazzaroni, who said the couple had nearly $13,000 on deposit. "It was like we expected that [bankruptcy] anyway, but it's not closure."
The Lazzaronis, who signed a contract in October, had sued Regency for defective workmanship on their partially built home and had hoped the builder would release them from the contract. A court date had been set for late August.
"I got kind of mad when they said, 'We're so sorry' " Lazzaroni said in referring to Regency President Frank V. Mazza's statement Thursday announcing the bankruptcy.
"I think if I owned a company and this thing was happening, morally I guess I would have felt obligated to explain to people more upfront what was going on instead of lying to them."
For now, Lazzaroni said, he's staying put at his townhouse.
"It's a real gut-wrenching thing to go through what we've gone through. We sort of mentally moved out of our current house back in February, and then after things started happening, and we got wise that it wasn't going to happen, we sort of divorced ourselves from the new home, put ourselves back in the old home and did some improvements."
Some buyers were questioning whether they were still bound to their contracts, even though Regency had ceased operation. Becky Bowman, assistant attorney general and director of its mediation unit, said buyers should feel free to look for another home.
"It would seem to me that the filing of the Chapter 7 bankruptcy is a pretty clear indication that the builder is not going to perform under the contract. There has been a breach of contract and that would release the consumer from any obligation they would have on the contract.
"I can't imagine a bankruptcy court imposing an obligation it's a liquidation so it's not like a business can keep on operating," Bowman said.
Homebuyers who had deposits with Regency can send claim information to Thomas Raimondi, associate deputy commissioner, Maryland Insurance Administration, 525 St. Paul Place, Baltimore, Md. 21202.
Pub Date: 8/01/98