[UPDATE, 12:57 am, Oct. 6, 2006: After the following story was posted, Kara Homes filed for chapter 11 bankruptcy protection, claiming assets of $350.2 million and liabilities of $296.8 million.]

Kara Homes, builder of big-ticket houses on the former site of the Tradewinds beach club in Sea Bright, is laying off workers and plans to file for protection from its creditors under federal bankruptcy laws, according to the Asbury Park Press.

The Press cited “a letter given to laid-off employees earlier this week” as its source for word of the imminent bankruptcy filing.

From the Press report:

Patrick W. Turner, the general counsel for Kara, told Gannett New Jersey [Wednesday] that the company terminated some personnel on Tuesday because it is “trying to restructure” the payroll.

“We are trying to become more profitable,” Turner said, without disclosing what sort of financial trouble the home builder is experiencing.

Turner said filing Chapter 11 “is one of the alternatives we’re considering,” but he said he could not comment on the letter.

A builder representing another company on the site of the Tradewinds at Sea Bright told redbankgreen this afternoon that Kara had filed for bankruptcy at 4:48p on Monday, causing a rush of lien filings the next morning. But no such filing has yet turned up in the federal online docketing system called PACER.

Kara had planned to build 20 homes priced from $1.8 million to $3.7 million on the Tradewinds site. But at least three of the approved lots have recently been acquired by subcontractor firms.

“They just got overextended,” a homeowner at the site told redbankgreen.

In addition to the Tradewinds project, East Brunswick-based Kara is also the developer of Cottage Gate on Route 36 in Middletown and other developments scattered across central and southern New Jersey.

The filing had been long rumored in posts on the Jersey Shore Real Estate Bubble Blog.

Kara was sued by the state last month along with nine Sea Bright beach clubs and the borough of Sea Bright over beach access issues.

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