Prominent Lexington developer James Edward Nuti and his wife, Angela Kay Nuti, have filed for Chapter 7 bankruptcy protection.
The filing is for the couple as individuals but does note their affiliation with nearly 20 corporations that they set up to do business as their various property developments. Those include NUTI Builders, Tates Creek Heights and Gateway Plaza.
The individual filing is because the couple had made personal guarantees to banks that are foreclosing or will foreclose on many of the properties, said the Nutis' attorney, W. Thomas Bunch Sr.
"This will discharge them from any legal responsibility to pay those banks and creditors," Bunch said.
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He said the couple, whom he advised not to speak to the media during the bankruptcy proceeding, have been living off borrowed money, and bankruptcy was the only solution.
The couple reported income of $145,232 in 2007, a loss of $183,399 in 2008 and an estimated $17,000 in income in 2009.
The bankruptcy filing states that the Nutis have 100 to 199 creditors and debts of more than $32.6 million. The personal guarantees on the business loans are included in those debts.
The couple's estimated assets are $571,565.87, primarily their home at 713 Brookhill Drive, off Lansdowne Drive. The property is valued at $500,000, but the filing notes that it is valued at $465,000 in a foreclosure proceeding.
"There were no assets to be salvageable," Bunch said.
The bankruptcy will essentially be the end, he said, to the Nutis' companies and property developments, even though those companies are not declaring bankruptcy.
"All of those companies listed are real estate-related companies, most of which have the major lenders having filed foreclosures suits against the companies," Bunch said.
As the foreclosures go forward, the companies will lose their assets, Bunch said, and they would not have remedies under bankruptcy law because they couldn't reorganize, and they do not have assets to sell and liquidate.
"We concluded none of the companies were salvageable," he said.
The companies will phase out of existence as they come up for their annual renewal with the Kentucky Secretary of State's office and are not renewed.
"In a year, there will be no companies," he said.
"Here's a guy who did construction, rental property, owned office buildings, and the businesses were closing, the office buildings were half-empty, and there was nothing but bankruptcy as the only answer," Bunch said.
Bunch said the recession and the reduction of real estate values are "hitting builders and contractors the hardest."
"And until building recommences, there's even going to be more contractors and builders going under," he said. "I just wish the Nutis the best because they've been hit the hardest.
"They were a highly respected builder and people in this community. These are classy people who have been hit awfully hard."