Harbor Custom Development, whose stock price fell from $110 per share to 57 cents in three years, has gone belly up.
The Tacoma-based developer has filed for Chapter 11 bankruptcy protection amid a challenging year marked by layoffs, poor stock performance and leadership changes, the Puget Sound Business Journal reported.
The move, described as voluntary in a recent news release, enables the company to pursue an “orderly wind down or restructuring of its business.”
The bankruptcy filing, submitted in the Western District of Washington at Tacoma, includes affiliated businesses from Pacific Ridge CM and HCDI FL Condo to Beacon Studio Farms.
Harbor plans to market and sell finished lots and homes during the bankruptcy process while continuing to run its multifamily developments.
Interim CEO Jeff Habersetzer attributed the company’s troubles to diversification into apartments amid a changing real estate market, coupled with challenges posed by high interest rates and inflation.
The Chapter 11 protection will allow Harbor Custom Development to continue its operations as it formulates a reorganization plan to “maximize value” for creditors. The company, with 100 to 200 creditors, according to the petition, reported $224 million in assets and debts totaling $172.5 million as of the end of September.
Sterling Griffin, the founder and former CEO, owns more than 5 percent of the company’s common stock. Tiburon Opportunity Fund and Matthew Fundenberger collectively own more than 5 percent of the preferred stock.
Griffin stepped down as CEO in May, according to the Business Journal.
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Since staging its initial public offering in August 2020 at $110 per share, Harbor’s stock has faced a steady decline, closing at under 57 cents per share on Tuesday, translating to a 99.5 percent loss in value.
The company initiated property sales in its portfolio in April of last year, listing six apartment projects for a total of $278 million. Despite a $14.25 million sale of its Mills Crossing townhome development in June, the company faced challenges, including a pending sale of its Bridge View Trail apartment site in Port Orchard for $11 million.
Founded by Griffin in 2014 in Gig Harbor, Harbor Custom Development moved its headquarters to Downtown Tacoma last year. The firm aims to navigate its financial challenges through the bankruptcy process and emerge with a viable reorganization plan.
— Dana Bartholomew