InTown, fired by HUD, files for Chapter 11; Contractors uncertain whether they'll be paid; Housing


Frustrated local contractors, owed tens of thousands of dollars for their work on government-foreclosed homes, are wondering if they will ever see a penny as InTown Management Group LLC announced yesterday that it had filed for Chapter 11 bankruptcy protection.

The Atlanta-based company filed papers there Wednesday, the same day that the U.S. Department of Housing and Urban Development terminated InTown's 21-state and District of Columbia contract for "failure to perform." HUD officials, accompanied by security guards, seized deeds and documents from InTown offices nationwide.

"They're into us big time," said Travis Noel of Noel and Henderson Properties Inc., who said that his Randallstown-based company is owed approximately $48,000 by InTown. "We handled landscaping, construction, general repairs. There are a lot of contractors who have lost homes personal property possessions by InTown not paying."

Noel said he and partner Curtis Henderson received a memo yesterday from Melton Harrell, chief executive officer and chairman of InTown, saying the firm filed for bankruptcy protection "to protect its interest" in the contracts it had with HUD. "It is our intention to reorganize and continue our operations," Harrell said in the memo.

Harrell also said the status of any payments due contractors would be addressed under the "regulations governing bankruptcy filings."

Federal Housing Commissioner William Apgar said yesterday that HUD would not pay the contractors.

"InTown is the entity that didn't perform well," he said. "The matter of payment to subcontractors is now in Bankruptcy Court. It is [InTown's] responsibility to pay the contractors."

Apgar said he sympathized with the contractors who were owed money and said HUD had "made timely payment of all invoices that InTown submitted to us."

InTown would receive a payment from HUD when it listed a foreclosed property, and another payment when it sold the property.

However, HUD said, InTown didn't sell as many properties as the department had expected. And, according to a release issued by HUD, the agency is "considering the possibility of further action against InTown officials."

According to the release, InTown, which nationwide was responsible for the marketing and selling of 25,000 foreclosed homes, sold only 2,261 homes since it began in April. Six other management groups collectively had sold nearly 15,000 homes.

At the Baltimore-area office, in Arbutus, InTown office manager Tish Bornschuer declined to comment and referred questions to the Atlanta office. An employee in Atlanta who wouldn't give her name would say only that the company would make a statement Monday.

The failure of InTown means that contractors such as Vercell Horton of Quickstart Cleaning, who came to the Arbutus office yesterday to submit invoices totaling $6,000, may find it difficult to recover.

"I was just starting back two months ago and I haven't been paid yet. It puts me in a bad state rough. I had to borrow money here and there just to get started," said Horton. He said he borrowed $2,000 to start his business.

Another contractor, Jim Pettyjohn of Baseline Construction Inc., said InTown owed him more than $61,000, but he was hoping that HUD would take into account the contractors' plight and pay them what they are owed.

"Some of the staff that worked in this office they don't have two pennies to rub together," Pettyjohn said. "I'll survive, but I would sure like to have that money.

"But in the meantime, HUD got an awful lot of work done on their properties for free."

Pub Date: 9/25/99

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