Homestead bankruptcy
By Other
Published in News on January 30, 2004 2:02 PM
GREENSBORO -- Project Homestead, which built houses in Goldsboro for flood victims and first-time buyers, has filed for bankruptcy.
The city of Goldsboro has been trying to get back land from the organization. The land, off Harris Street, was supposed to have been developed, but only half of the proposed 60 houses have been built on the 30 acres.
Project Homestead used the land to borrow money, even though it was not authorized to do so. The city retained the ownership of the property if the houses were not built.
The filing on Thursday follows news over the past six months of problems with the organization. The city of Greensboro completed a critical audit of how it accounted for and used public money. The organization also faced charges by customers that many of its homes were shoddily constructed. And its founder, the Rev. Michael King, died.
Federal bankruptcy court documents show the agency filed for Chapter 7 bankruptcy, under which a trustee is appointed to sell the business' property and repay creditors.
Project Homestead board Chairman Alton Thompson estimated the agency's debts at "between $5 million and $8 million" during an interview Thursday with the Greensboro News & Record.
Thompson said the nonprofit had land, houses and other assets worth between $9 million and $11 million, but that it would be almost impossible to sell the property for what it was worth because of the negative publicity surrounding Project Homestead.
"We decided that a law firm and bankruptcy trustee could dispose of the property more efficiently than we could, and that this way our creditors might be treated with some measure of equity," Thompson said.
Thompson said he hopes Project Homestead will be able to survive, but that it would have to be "a much different organization in terms of leadership, internal controls and customer service."
Court records listed 23 creditors, including the city of Goldsboro. Also named were Robert Donnell, Randolph Mitchell and Mischell Sinclair, all three of whom sued Project Homestead and King in the past year, alleging that King coerced or attempted to coerce employees of the nonprofit into having sex.
More creditors will be added to the proceeding, said Project Homestead lawyer Douglas Wickham.
Greensboro city officials contacted by the News & Record said they were disappointed by the news.
City Council member Yvonne Johnson said she was shocked, although she "knew they were struggling." She said city leaders must now "make sure Project Homestead pays the city what it is owed."