Home Director won't let a mountain of debt keep it from rebuilding its structured wiring business, legendary in the late 1990s and early 2000s for its aggressive marketing and strong following among homebuilders.
The company ceased operations in April of 2005, and we thought that would be the end of it. But a few months later, on Sept. 29, Home Director filed for bankruptcy protection under chapter 11, and by November the company had secured a $2.5 million loan and opened new offices in Campbell, Calif.
In papers filed in the U.S. Bankruptcy Court for the Northern District of California in Oakland, Home Director listed liabilities of about $4.2 million. Assets were listed as $10.6 million, but that was for the September 2004 period. Excluding $5.8 million of “intangibles” and at least $4 million in losses incurred after September 2004, Home Director's assets by filing time would have totaled less than $1 million.
Home Director's Chapter 11 proceedings involve three cases — one for Home Director Inc. (#05-45812), one for Home Director Technologies Inc. (#05-45814) and one for Digital Interiors Inc. (#05-45819).
The latter may cause some confusion among industry watchers. Digital Interiors was an integration company that Home Director acquired in 2000. In March 2005, Home Director sold the integration business to 180Connect for roughly $350,000 plus a percentage of future sales. So why is it still on the Home Director books? As it turns out, 180Connect bought virtually all of the assets of Digital Interiors, including the offices, personnel and brand, but none of the stock. Home Director still owns 100 percent of the stock of the defunct company, and attributes about $1.5 million in liabilities to it.
It is unclear what Home Director plans to do with DI. In a statement of operations for October, there is no activity listed for the installation business. On the other hand, $85,000 was spent in October for Home Director salaries.
Michael Liddle, who took over as CEO of Home Director in January 2004, continues to serve as CEO. He blames Home Director's demise on many factors including the burden of owning an integration company that competed with independent dealers, and misplaced faith in a partnership with Sears. Both of those initiatives were launched by Liddle's predecessors.
Home Director saw its product revenues slip away over the years, from a high of $13.2 million in 2001 (when net loss for the year exceeded $30 million) to a low of roughly $2 million in 2004.
Meanwhile, under its new ownership Digital Interiors seems to be thriving. On Nov. 8, 180Connect reported, “In the third quarter, we secured two new contracts in Northern California with Syncon Homes and Cobblestone Homes representing over 125 homes. These contracts, coupled with our Q4 2005 backlog of over 250 homes will reduce our start-up losses throughout the next several months and will take our homes under contract to over 50,000.”
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