TOUSA files Chapter 11

Yesterday, TOUSA (the parent company of Engle Homes, among other builders) would have defaulted on about $550 million in debt, because they couldn't make an interest payment.

Instead, they have filed for bankruptcy protection. And, to their credit (pun intended), they were able to get bond holders to agree to accept stock in a re-organized company that somehow managed to get a $150 million loan from CitiGroup.

CEO Antonio Mon tried to downplay all this by stating, "Our business in fundamentally sound."

I don't know how he can make such a claim. The company still owes a total of $2.24 billion, and posted a loss of $619.7 million during the third quarter of 2007. (Fourth quarter numbers, I suspect, will be equally dismal.)

Unless there is a massive turn-around in the market, which I am afraid appears unlikely in the near term, the $150 million dollar life line is not going to be adequate.

This is bad news, not just for TOUSA employees and debt holders, but to folks like me who work in the broader housing market.

Time for some belt-tightening.

I hate it.