The company expects to file for bankruptcy in the coming week, according to The Oregonian: "Slow sales have made it impossible for the Lake Oswego company to remain current on any of its $85 million in bank loans, company officials said.
"Renaissance will be the third prominent metro-area home builder to file Chapter 11 since May. Though some in the housing industry initially insisted that the real estate bust would spare Portland due to in-migration and other factors, it now appears that the shrinking home values and stalled sales that hit much of the rest of the country in 2006 and 2007 were simply late in arriving here."
Renaissance Homes has built or is in the process of building projects all over Oregon and Washington, including Fremont Place, Shevlin Pines and Renaissance Ridge in Bend.
Unlike a Chapter 7 bankruptcy, in which a company ceases operations and sells off all its assets to repay its creditors, a Chapter 11 bankruptcy is not a death sentence. Under Chapter 11 the bankrupt corporation typically proposes a reorganization plan to keep the business alive and a program to repay the creditors over time. But in the midst of the current global financial crisis it could be tough for Renaissance to line up new money and stay afloat.
"Randy Sebastian, the company's CEO and founder, who appears in many of its ads, vowed that Renaissance will survive its brush with insolvency. It has worked out tentative financing arrangements with five banks," The Oregonian said.
But Sebastian has sung that tune before. In March 2007 KeyBank started foreclosure proceedings against Aspen Landing LLC, a holding company for Renaissance Homes, saying it was owed $13.1 million on Renaissance Ridge. In May, Sebastian said he had lined up new financing and was able to pay the debt and avoid foreclosure.
In recent months, The Bulletin's "News of Record" section has reported a number of civil suits against Renaissance by suppliers and subcontractors. However, Bend's local paper has not yet reported on the impending bankruptcy.
In early August, in a story headlined "3 builders, though hard-hit, remain optimistic," The Bulletin quoted Sebastian as saying his company was "muscling through" the downtown, although it had been forced to lay off half of its staff and its home sales had dropped by one-third.