Ten or 12 years ago, it wasn’t a shock when a builder filed for Bankruptcy and left behind dozens of half-completed projects and unaccounted for customer deposits in its wake of discharge and dispair.
But, in our modern/better/faster/stronger economy, I was really surprised to see Riverwood Cabins, LLC file a Chapter 7 Bankruptcy in Nashville a few days ago.
Riverwood Cabins builds prefabricated cabins and modular log homes for customers (generally in Tennessee), and then delivers the cabins nationwide to the customer’s land for assembly.
Per the Bankruptcy Schedules, Riverwood claims assets of $265,205.18, and total debt of about $5,900,000.
Of that debt, here’s what’s mind-blowing: that debt includes $4,468,842 (*) in unaccounted for customer deposits that are claimed as debts.
To be clear, the customers who paid 50% down as a deposit for the cabin, and, now, that money is gone and entirely unaccounted for.
This isn’t a few dollars short here and there. This is 4 MILLION dollars.
In the Great Recession, a little shortage here and there wasn’t a shock.
Builders would dip into a little bit of funds from Project C so that they could finish up Project A. Then, a few weeks later… in order to finish Project C, they might dip into the funds on Projects E and F. In the end, the whole scheme would come crashing down when the shortages outpaced the new contracts from new customers.
But I haven’t seen this type of shortage before.
I’m literally shocked by the large number of customers (about 65) who don’t have cabins or any explanation of where their cabins–or their deposits–are.
Creditors Rights 101 