Legacy Homes of Lincoln has arranged to buy another big chunk of HearthStone Homes’ bankruptcy estate — 40 single-family houses in various stages of construction.
Along with paying $2.25 million for the unoccupied properties, Legacy has agreed to assume taxes and assessments for a total cost of about $2.75 million, according to court documents filed Wednesday.
Proceeds ultimately would be distributed to Wells Fargo Bank and multiple other entities owed at least $24 million by HearthStone, which filed for Chapter 11 reorganization in February.
While Legacy owners Steve and Rob Champoux of Lincoln continue to pursue the purchase of 600 undeveloped HearthStone lots, buying the 40 houses allows the brothers to move ahead with their plan to re-establish the HearthStone business model under new leadership.
Steve Champoux already has a name in mind: Legacy of HearthStone.
“People know the name HearthStone,” he said. “We want to keep that connection, but we also want people to know we are a new company.”
A few weeks ago, Legacy purchased the former HearthStone Homes’ showroom. Plans call for that Choice Studio, 810 N. 96th St., to open in about a week as the base of Legacy’s Omaha operations.
Legacy also has rights, Champoux said, to the HearthStone computer software system and building plans. Most recently, the company hired seven former HearthStone supervisors.
“Our main thing,” Steve Champoux said in an interview Wednesday, “is to build homes for families, which in turn will help the local economy and put subcontractors back to work.”
He acknowledged the negative undertones of a bankruptcy filing, but said many people have told him they are glad to see someone pick up the mission that HearthStone carried out for the previous 40 years.
“I think the benefits outweigh the negatives,” Champoux said. “We’re not the same company, but we want to re-establish the great parts of HearthStone.”
Legacy will not assume responsibility for past HearthStone home warranties or past business debts, Champoux said.
Troy Peterson of Peterson Building Group, a former HearthStone subcontractor, said Wednesday that he could put about 35 laid-off people back to work if he were to resume construction of 40 houses. He said he’s been excited about the Legacy plan since he heard of it.
“I am hoping they come out of the gate running,” Peterson said, “which I think they will with 40 homes.”
Peterson said the backing of former HearthStone subcontractors would help a new company’s success. He said the well-oiled network allowed price-conscious consumers buying their first or second homes to build a HearthStone residence fast and economically.
“People know the HearthStone name,” said Peterson. “Is it tarnished a bit? Probably, but with new ownership and management ... there are still a lot of believers in the HearthStone brand, how the homes are engineered.”
At one time, HearthStone was the largest production homebuilder in the area, building more than 900 houses at the local market’s peak in 2007, and more than 300 last year.
The sale of the 40 homes is subject to a judge’s approval and a public bid process. However, court-appointed trustee Randel Lewis said in a legal filing that he had already “effectively and efficiently” marketed the under-construction houses nationally and locally.
National contacts showed no interest in the partially completed homes, Lewis said. He also met with numerous local brokers and companies.
A prompt sale is critical as the houses are a cost drain on the HearthStone estate and present a risk of further deterioration and danger to the public. The houses, Lewis told the bankruptcy judge in the filing, “will continue to devalue and constitute a potential hazard to the community until sold to a purchaser that can complete them.”
All of the 40 houses are within two to 12 weeks of completion, Steve Champoux said. Some are nearly done; others are at the foundation stage. It takes about 14 weeks to complete a HearthStone model, he said. Only one of the 40 houses is spoken for at this time, Champoux said.
Legacy Homes LLC was formed by the Champoux brothers in December 2009. They also own Lincoln-based Prairie Home Builders. Their companies have built 20 to 25 homes in the Omaha area in the past few years.
“We just want to get it up and going again,” Champoux said. “We’re excited to try this new venture.”
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