On July 19, 2002, Homes.com became one of the first, if not the first, dot-coms to file a reorganization plan with Federal Bankruptcy Court. Pending a hearing scheduled for August 22, 2002 in San Francisco for the firm to review the plan with the Federal Bankruptcy Court and respond to questions from creditors, Homes.com plans to emerge from bankruptcy as early as October, 2002.

"We fully expect to receive approval from the Court and emerge from bankruptcy no later than early October which will represent a major benchmark in the recovery of our company," says Homes.com CEO Tom Orsi. "It is a testimonial to each of our employees for working through this difficult time."

In a company e-mail to employees, Orsi wrote, "I want to thank everyone involved for what has been a monumental effort and accomplishment that has changed the future of our company and the many people involved."

Homes.com has converted a large number of its free Web site holders into paying subscribers. "We have 13,000 plus subscribers, paying customers, and over 500 broker customers," says Orsi. "We continue to do well from a financial and operating point of view and we are cash flow positive from operations and have been since we filed for Chapter 11 and expect to be as far out as we can see."

The reorganization began 16 months ago, when Orsi and his new management team took over.

"We just named John Perkins as COO," says Orsi. "He was in the real estate and mortgage industries and was the founder of Real Estate Village, the telemarketing company that was acquired by Homes.com. He was in charge of sales and business development and has assumed broader responsibilities. John's made outstanding contributions to our recovery."

Orsi credits a concentration on customer service for the turnaround.

"We are ahead of where I thought we would be," says Orsi. "The customer losses we thought we would experience are lower than we projected and we stabilized the business sooner than I thought we would. Our customer service has produced the results. We have seen a significant reduction in customer losses from a high in October 2001 to very modest levels currently. We are still showing some net losses, but expect to rebuild the Agent Advantage population on a monthly basis based on service, improvements on the product, and improved efficiency on the sales channels. We are looking for the same improvement on the broker business. We have done a better job managing the listing side of the business and resolved some technical problems on the quality, timeliness, and reliability of the listings."

Profitability gains new respectability, as Homes.com becomes a more attractive partner for other companies.

"We are aggressively pursuing new business opportunities," says Orsi. "Our approach is we aren't going to add new business that doesn't produce immediate returns. I think by virtue of our turnaround, we are being approached by companies who would like to join with us on a venture basis or a larger commitment."

Published: July 31, 2002

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