July 20, 2012
By: John Clark
The stubborn housing market that remains one of the country’s biggest hurdle to financial recovery has claimed another victim, as Colorado-based Ideal Concrete Inc. has filed for Chapter 11 bankruptcy protection, according to a report from the Colorado Springs Gazette.
Sources say that Ideal Concrete lost a significant amount of construction business when the housing market dried up, and can no longer face its creditors without aid from a bankruptcy court.
According to Clarence Gianarelli, who co-owns the business with his wife, the 60-yar-old company plans to continue operating with a skeleton crew of 20 employees during the bankruptcy process.
Under Chapter 11, the company will be allowed to create a plan to repay its creditors while it is allowed to continue running its business. And during the bankruptcy process, Ideal Concrete will have strong protection from the immediate demands of its creditors.
In addition to the corporate filing, though, Gianarelli and his wife also filed for personal bankruptcy, and they asked the bankruptcy court to handle both cases jointly in the interests of efficiency.
The final straw that broke the company’s back appears to have been a court judgment against Ideal Concrete that arose from a lawsuit filed by a bonding company, United Fire & Casualty Inc., which claimed Ideal owed it $1.33 million.
United Fire won the lawsuit, which in theory allowed it to foreclose on Ideal’s property, but the company’s decision to file for bankruptcy helped stave off the threat of foreclosure, at least for now.
United became one of Ideal’s largest creditors after the concrete company failed to pay the lender for construction materials it used when it built sidewalks in Fort Carson, Colorado.
Ideal’s founder, however, claims that construction delays forced the project to hire more workers, and the unforeseen labor costs far outpaced the revenues Ideal expected to receive from the project.
According to Gianarelli, the company’s woes are tied to the state of the economy because 40 percent of his business relied on residential construction, which effectively stopped for three years after the recession started.
With the help of the bankruptcy court, though, Gianarelli believes that his company is "back on the way up out of the hole we were in."
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