Orleans Homebuilders, the Bensalem, Pa.-based builder with 11 operating divisions in eight states, on Monday became the latest big builder to seek court protection from its creditors when it filed for Chapter 11 bankruptcy. [The move particularly hurt 84 Lumber, to which Orleans owes $1.47 million, the Philadelphia Inquirerreported.]

As of Dec. 31, Orleans had $440 million in total assets and $498.8 million in total liabilities, which include $419.1 million in debt. It filed its petition for protection from creditors under Chapter 11 of federal bankruptcy laws only two weeks after a 17-member bank group failed to achieve 100% approval to extend the maturity date for Orleans' $350 million senior credit facility, which has an estimated $311 million of cash borrowings outstanding. Orleans went into default of that loan (whose maturity had been extended twice before). That precipitated the builder's Chapter 11 filing.

Obtaining another loan extension was critical to Orleans' ongoing pursuit to find a buyer for the company. In a statement it released on Monday evening, Orleans said that it had presented its lenders with "a non-binding letter of intent relating to the sale of the Company," two days before the banks decided against the loan extension.

Orleans did not reveal the name of the potential suitor, but said that it would continue to pursue a sale while under Chapter 11 protection.

Since June 2006, the company had decreased its workforce by 69% to 300 employees. Between June 2006 and June 2009, it lowered the number of lots it controlled by 66%. During that same period, Orleans' administrative expenses were cut in half. And from September 2006 through December 2009, it slashed spec inventory by three-quarters.

Orleans said its divisions would continue business "without interruption" while the company reorganizes under Chapter 11. Orleans builds and sells homes in Pennsylvania, New Jersey, New York, Virginia, North and South Carolina, Illinois, and Florida. The builder has reached agreement with certain lenders for up to $40 million in debtor-in-possession financing, pending court approval.

John Caulfield is senior editor for Builder magazine.