Rocky Mountain Mutual Housing Association ("the Mutual") was a not-for-profit affordable housing organization incorporated in Denver, Colorado, in April 1992. The Mutual was founded for the purpose of acquiring, developing, and managing affordable multi-family housing to meet a growing social need for low cost affordable housing. The idea of "mutual housing" was based on a European residential model which provided permanent housing to anyone who was motivated to meet the obligations and challenges associated with homeownership.A fundamental feature of the Mutual's mission was to provide services to its residents in a variety of areas, including job training, after-school programs, and homeownership programs. The overall goal of these programs was to provide the residents with the tools for gaining equity and equality in the housing market. A unique attribute of these "mutual" communities was direct resident involvement in the management and decisions that affected the communities.
The case describes the aggressive expansion undertaken in the 1990s and the operational and financial challenges faced by the Mutual as the housing market and local economy took a nosedive, adversely affecting property values and cash flows since the dot-com bust. Experts in the field, such as HUD, and lien holders urged the Mutual to file for bankruptcy while the Mutual's Chairman of the Board, Victor Gordman, was unyielding. The case focuses on the strategic decision of whether the Mutual should file for bankruptcy and exit by selling off its properties or stay committed to its mission and continue operations.
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