Summary of 4/23 Hearings

On April 23, 2007, the Court held an omnibus hearing addressing the following items:

1. Motion for Relief from the Automatic Stay with respect to 14 Forest Edge Court, Stafford, NJ filed by Sun National Bank: The Court scheduled a plenary hearing for May 31, 2007 at 10:00 am to hear evidence and determine whether cause exists to grant relief.

2. Motion to Compel Rejection of Executory Contract on behalf of Herbert and Sonya Yefsky: Adjourned until June 4, 2007 at 1:00 pm.

3. Motion to Compel Rejection of Executory Contract on behalf of Hung and Jin Chae: The motion was granted to permit the Chaes to terminate their contract by written notice to the Debtors.

4. Motion to Compel Rejection of Executory Contract on behalf of Frank DiGirolamo: Adjourned until May 7, 2007.

5. Motion to Compel Rejection of Executory Contract on behalf of Patrick and Gayle Giannetti: The Motion was granted to permit termination of the contract and relief from the automatic stay to pursue any claims the homebuyers may have against the bonding company. The Court did not impose a lien on the property.

6. Motion to Compel Rejection of Executory Contract on behalf of Mary Ann Garzaniti: The Motion was granted to permit termination of the contract and relief from the automatic stay to pursue any claims the homebuyers may have against the bonding company. The Court did not impose a lien on the property.

7. Motion for Final Order Authorizing Kara at Buckley Estates to Obtain Financing from Credit Suisse: Granted.

8. Motion for Final Order Authorizing Country Club Estates to Obtain Financing from Credit Suisse: Granted.

The next hearing date is scheduled for Monday, April 30, 2007 at 1:00 pm in Trenton, New Jersey.

Summary of 4/16 Hearings

On April 16, 2007, the Court held an omnibus hearing addressing the following motions/applications:

1. Motion Setting a Date by Which Debtor Must Assume or Reject Off-Site Improvement Contract and Other Relief on behalf of K. Hovnanian Old Bridge, LLC: Withdrawn by K. Hovnanian Old Bridge, LLC.

2. Motion for Relief from Stay to Set-Off Retainer Account filed by Flaster/Greenberg, PC: Consent Order to be Submitted.

3. Motion for Relief from Stay with respect to Bond #501156 filed by John Smallwood, Sr.: Adjourned until April 18, 2007 and was subsequently Granted.

4. Motion for Relief from Stay re: Block 4, Lots 7.06; 7.09 and 7.10 Sea Bright, NJ filed by Amboy Bank: Adjourned until April 18, 2007 and was subsequently scheduled for plenary hearing to be heard on May 17, 2007 at 10:00 am.

5. Motion for Relief from Stay re: 14 Forest Edge Court, Stafford, NJ on behalf of Sun National Bank: Adjourned until April 23, 2007.

6. Motion for Relief from Stay re: Crine West Estates, Lot 10, Block 180.01 on behalf of Xue Yun Chen and Anthony O’Reilly: Consent Order Submitted.

7. Motion for Relief from Stay re: Block 729, Lot 7.02; 7.34; 7.39; 7.40 Block 746 Lot 29.44; Middletown, NJ filed by Amboy Bank: Adjourned until April 18, 2007 and was subsequently scheduled for plenary hearing to be heard on May 17, 2007 at 10:00 am.

8. Motion for Relief from Stay re: Various Parcels of Crine West in Marlboro, NJ filed by Amboy Bank: Adjourned until April 18, 2007 and was subsequently scheduled for plenary hearing to be heard on May 17, 2007 at 10:00 am.

9. Motion to Approve Settlement between Kara Homes, Kara at Enclave II and United Water Toms River: Adjourned until April 18, 2007 and was subsequently Granted with an Order to be Submitted.

The next hearing date is scheduled for Monday, April 23, 2007 at 1:00 pm in Trenton, New Jersey.

Plan and Disclosure Statement

On April 12, 2007, the Debtors filed a master plan of reorganization and disclosure statement for all affiliates.

In short, the treatment of the unsecured creditors is as follows: (a) $500,000 in a down payment (to be distributed on a global, pro-rata basis) and $5,000 per home sold paid to the holders of claims in the individual affiliate estates in which the sales take place. The $5,000 payments, however, will only occur if there is "net" equity after repayment of all existing liens. There are no other sources of money for distribution to the unsecured creditors, except for avoidance actions and certain "designated" causes of action. The plan also provides for a release of claims against Zuhdi Karagjosi.

The Court has scheduled a hearing on the adequacy of the disclosure statement for May 24, 2007 at 10:00 am. All objections to the disclosure statement must be written and filed with the Clerk of the Bankruptcy Court and served on counsel to the Debtors, counsel to the Committee and the Office of the United States Trustee no later than ten (10) days prior to the hearing date, or May 14, 2007.

Copies of the Plan and Disclosure Statement are available online through PACER or by written request to Debtors' counsel.

Summary of 4/9 Omnibus Hearing

On April 9, 2007, the Court held an omnibus hearing addressing the following items:

1. Confirm Results of Auction held on March 27, 2007 to Sell Six (6) Real Estate Developments: The results of the auction were approved; orders memorializing the Court's decision and opinion to be submitted for entry.

2. Motion by K. Hovnanian at Old Bridge, LLC to Compel Debtors to Assume or Reject Off-Site Improvement Contract: Adjourned until April 16, 2007; however on April 10, 2007, K. Hovnanian filed a document withdrawing the motion.

3. Motion for Relief from Stay filed by Amboy Bank regarding Parcels of Land Owned by Horizons at Birch Hill, LLC: Granted. The Debtors did not oppose the motion due to the lack of equity in the project.

4. Motion and Letter Brief of Edison Township to Vacate Stay: Denied, an Order will be submitted.

5. Application of Estates of North Edison, LLC Compelling Debtors to Assume or Reject Agreement of Sale of Real Property Located at Woodland Avenue, Edison: Adjourned until June 4, 2007 to allow forty-five (45) day condemnation clause to lapse in the Sale Agreement with Fenix.

6. Application for Entry of an Order Compelling Payment of Administrative Claim to Anthony & Co.: Evidentiary hearing to determine validity of claim is set for May 10, 2007.

7. Application of Investors Savings Bank for Relief from the Automatic Stay to Pursue Foreclosure of Real Property Located at Woodland Avenue, Edison: Adjourned until June 4, 2007 to allow forty-five (45) day condemnation clause to lapse in the Sale Agreement with Fenix.

8. Application to Reject Executory Contracts Relating to Use and Occupancy of Certain Model Homes and Furniture Leases: Granted. Cross-motion to declare amounts due under the executory contracts related to Use and Occupancy of Certain Model Houses and Furniture Leases as administrative expenses is set for evidentiary hearing on May 10, 2007.

9. Application of Investor Savings Bank for Relief from the Automatic Stay to Pursue Foreclosure of Real Property commonly known as Park Meadow at Edison Should the Property Fail to be Sold at the Scheduled Auction: Adjourned until June 4, 2007 to allow forty-five (45) day condemnation clause to lapse in the Sale Agreement with Fenix.

10. Application for Entry of Final Consent Order (i) Authorizing Sterling Acres at Monroe, LLC to Incur Post-Petition Secured Indebtedness to Valley National Bank for Purposes of Winterizing and Completing Construction of Homes: Granted.

11. Motion for Relief from Stay regarding Modular Units of Behalf of GE Capital Modular Units: Adjourned until April 30, 2007.

12. Motion for Relief from Stay to Set-off Retainer Account on behalf of Flaster Greenberg, PC: Adjourned until April 16, 2007; consent order to be submitted.

13. Motion for Relief from the Automatic Stay on behalf of Guttman Family Trust: Granted.

14. Motion to Compel James Green, Trustee, to Discharge Mortgage: Granted.

Summary of 4/4 Hearings

On April 4, 2007, the Court held a hearing addressing the following items:

1. Motion for Termination of Contract on behalf of Constance Mueller: Adjourned until April 30, 2007.

2. Motion for Permission to File a Late Proof of Claim on behalf of Mobility Elevator & Lift Co.: Granted.

3. Motion for Termination of Contract on behalf of Seoung and Donna Baik: Adjourned until April 25, 2007.

Summary of 4/2 Omnibus Hearing

On April 2, 2007, the Court held an omnibus hearing addressing the following items:

1. Confirm Results of March 27 auction to sell real estate developments: Adjourned until April 9, 2007.

2. Motion for Termination of Contract filed by Seoung and Donna Baik: Adjourned until April 4, 2007.

3. Motion for Termination of Contract on behalf of Constance Mueller: Adjourned until April 4, 2007.

4. Motion for final consent order (I) authorizing Sterling Acres at Monroe, LLC to incur post-petition secured indebtedness to Valley National Bank for the purposes of winterizing and completing construction of homes, (II) granting security interests, and (III) providing related relief: Adjourned until April 9, 2007.

5. Motion for Permission to File a Late Proof of Claim on behalf of Mobility Elevator & Lift Co.: Adjourned until April 4, 2007.6. Motion for Relief from Stay to Terminate Contract and Proceed Against Bonding Company on behalf of Smallwood: Adjourned until April 16, 2007.

Auction on 3/27

On March 27, 2007 an auction was held to sell six Kara Homes subdivisions:

1) Dayna Estates;
2) Hartley Estates;
3) Park Meadow;
4) Prospect Ridge;
5) Sterling Acres; and
6) Woodland Estates.

All six properties were sold at the auction and the sale confirmation hearing will take place on April 9, 2007.

Summary of 3/26 Hearings

On March 26, 2007, the Court held a hearing addressing the following items:

1. Motion to Approve Settlement between Debtors and Bank of America: Granted, the Settlement Agreement is approved.

2. Motion to Sell Hidden Lakes/Kara at Lacey, LLC: Granted, the Order provides the procedures of the auction of sale which will be held on May 29, 2007 and hearing to confirm sale will take place on June 4, 2007.

Extensive of Exclusivity Period

On March 23, 2007, the Court held a hearing on the Motion to Extend the Exclusive Period Within Which Debtors May File a Plan and Solicit Acceptances: Granted, the Court authorized an extension of the Exclusive Period up through and including April 12, 2007.

Summary of 3/19 Omnibus Hearing Date

On March 19, 2007, the Court held an omnibus hearing addressing the following items:

1. Motion to Compel Payment of Administrative Expenses filed by Monroe Township: motion was adjourned until April 17, 2007.

2. Motion for Joint Administration: Granted, permitting all affiliates of Kara Homes that have filed petitions under Chapter 11 of the Bankruptcy Code to be jointly administered.

3. Motion for Adequate Protection, or in the alternative, for Relief from the Automatic Stay on behalf of Wells Fargo: Adjourned until April 9, 2007 however, on March 28, 2007, the leases were rejected by Consent Order.

4. Motion for entry of an order: (1) granting GE Capital Modular Space relief from the automatic stay to terminate lease agreements and recover modular units or, in the alternative, for adequate protection payments; (II) allowing and requiring payment of an administrative expense claim; and (III) requiring an accounting: Adjourned until April 9, 2007.

5. Motion to (a) compel Debtor to assume or reject Lease Agreements or, alternatively, (b) compel Debtor to perform all obligations arising from or after 60 days from the date of filing and make all future rent payments, late fees, and other charges under the Lease Agreements as they become due or, alternatively, (c) modifying the automatic stay on behalf of GE Capital Modular Space: Granted, the Debtors have until April 9, 2007 to accept or reject the leases.

6. Motion for Relief from Stay to Set-off Retainer Account on behalf of Flaster Greenberg, PC: Adjourned until April 9, 2007.

7. Motion for Relief from Stay to Terminate Contract and Proceed against Bonding Company filed by Philip Kaputa: Granted, the Contract is terminated and the Kaputas are granted relief from the automatic stay to pursue any claims they may have against the Bonding Companies.

8. Motion of John and Helen Fallone for Relief from the Automatic Stay and to Compel Arbitration: Granted, the automatic stay is vacated to permit the Fallones to resume and prosecute arbitration proceedings against the Debtors for the recovery of the $106,300 being held in escrow in connection with the incomplete construction and installation of certain items in their home.