Nonprofit files for bankruptcy protection

A local nonprofit group that built affordable housing has filed for bankruptcy protection in a maneuver that was likely made to help it avoid a $1.3 million legal judgment.

Charleston Affordable Housing Inc. of Mount Pleasant is seeking to reorganize, according to court documents filed Thursday in Columbia. Filings indicated that the group owes between $1 million and $10 million to its creditors.

The move came just hours before a scheduled court hearing related to the judgment.

Cathy Kleiman, Charleston Affordable Housing's executive director, could not be reached for comment Friday. Her lawyer, Jonathan Altman, declined to provide additional details but said that homeowners who bought property through the nonprofit won't be "negatively impacted" by the bankruptcy filing.

Kleiman told The Post and Courier in the fall of 2007 that the organization had "basically been dormant" after the state's highest court rejected two attempts the group made to fight the $1.3 million judgment that year.

For more than four years now, the nonprofit had been contesting the award to D.C. Development. The contractor had sued the group over unpaid bills for work on a Fort Mill housing complex that was being developed by Glenwood Falls LLC, a partnership co-founded by Charleston Affordable Housing.

The development started in 2001 but was beset by weather problems and poor site conditions, adding costs and time to the project. In the end, D.C. Development walked off the job over unpaid bills. Also, tax credits that were needed to finance the project disappeared because the completion date was missed. A bank eventually foreclosed on the property.

The contractor has been pursuing

Charleston Affordable Housing because Glenwood Falls was essentially a legal entity with no assets.

William E. Booth III, a Columbia attorney representing D.C. Development, said Thursday's bankruptcy filing came just hours before a scheduled hearing in York County, in which he was seeking to have the Mount Pleasant-based group named in the judgment.

"I think that had a lot to do with when they filed the bankruptcy," said Booth, who said the filing prevented the hearing from going forward.

The 2005 judgment, filed in Charleston County and now worth an estimated $2 million, lists only the partnership company, Glenwood Falls, as the debtor.

Booth said he's not certain how the bankruptcy filing will affect his client's effort to collect the judgement.

"With what they have filed, it's difficult to tell where they are sitting right now, financially," he said.

Charleston Affordable Housing, founded in 1991, developed apartment complexes for low-income residents throughout the state. In the Charleston area, they built and sold homes to residents who qualified.

Court documents filed Thursday valued their assets at between $1 million and $10 million. The number of individuals and companies that it owes money is fewer than 49, and the biggest disclosed debt was $20,000 owed to Altman's law firm. D.C. Development is not listed as a creditor.