A Lake Stevens development company pummeled by the downturn in the real estate market announced it will close its doors July 4.
Barclays North Inc., once one of the largest employers in the city, will lay off its remaining 19 workers and cease operations, said Patrick McCourt, chief executive officer.
“It’s a matter of cash flow,” McCourt said. “I can’t afford to pay staff and I’m not about to ask my staff to work for nothing.”
Just two years ago, the company employed more than a 100 and owned millions of dollars worth of raw land in Snohomish County.
The company flourished during the housing boom, snapping up 2,000 buildable lots in the county and 7,000 more spread across other states. Many of those lots were acquired on behalf of national builders such as Quadrant Homes and Centex, and when the national mortgage mess hit, those national clients walked.
Barclays was left with thousands of lots it couldn’t sell and millions of dollars in loans it couldn’t pay.
The company’s closure follows months of effort by McCourt to appease creditors and keep the business alive.
Barclays North laid off staff, consolidated operations, stopped work on projects and tried to sell off projects. McCourt held weekly audio conferences with his creditors, which at one point totaled close to 100, according to court documents.
A handful of lenders sued Patrick McCourt and his wife, Stephanie McCourt, to recover a total of more than $4 million in loans. Those that have taken legal action are First Sound Bank of Seattle, Banner Bank of Walla Walla, Cathay Bank of California, Bingo Investments based in Bellevue and Shoreline Bank.
Barclays creditors include several local banks, including Cascade Bank and Frontier Financial Corp. Neither would comment on specific lending relationships. However, Frontier’s president and CEO John Dickson told share owners in April that Barclays owed less than $300,000.
Carol Nelson, the president and CEO of Cascade Bank, acknowledged the institution has a lending relationship with Barclays and that real estate securing those loans is in the process of foreclosure.
“This process should not be affected by the closure of their office,” Nelson said. “All banks are in the business of managing risk and all banks maintain an allowance for potential loan losses.”
Several months ago, McCourt acknowledged that Barclays North owed Cascade $12.6 million in loans and said then that he planned to take care of them soon.
Barclays North isn’t the only one struggling to stay solvent.
“It’s fair to say all builders and developers are facing pressures in this market, although every company’s business model is different,” said Mike Pattison of the Master Builders Association of King and Snohomish Counties.
Developers like Barclays with many national contracts probably will fair worse than those who deal with local builders simply because the local real estate market is faring better than many, he said.
Barclays is the second major local company to be shut down by the national mortgage crisis. Mortgage Investment Lending Associates Inc. of Mountlake Terrace went bankrupt last year. At its height, the company had 700 employees and funded $4 billion in mortgage loans. In its Chapter 11 filing, the company listed $7.9 million in assets and $174.7 in liabilities.
McCourt, meanwhile is hoping to avoid MILA’s fate.
The company won’t file for bankruptcy willingly, and McCourt said he’ll continue to try to satisfy lenders.
McCourt declined to cite how much the company owed, but he said the company still owns half of its buildable lots. Barclays North’s office buildings went up for sale, and McCourt said a buyer has made an offer. He declined to say who, noting the deal hasn’t closed.
McCourt can’t think about the long-term future of the company he built from scratch.
“I will never stop trying,” he said. “The creditors and the vendors and the lenders may force my hand but I won’t do it voluntarily. I’m not filing for bankruptcy.”
Reporter Debra Smith: 425-339-3197 or email@example.com.