Two former Anchored Tiny Homes executives filed for Chapter 7 bankruptcy protection in California.
Colton and Austin Paulhus, co-founders of the tiny homes franchise, filed bankruptcy petitions October 11 and September 30, respectively.
Anchored Tiny Homes manufactured tiny homes and accessory dwelling units, which can be built on lots with existing houses. Theirs was a style of unit growing in popularity as the housing crisis in the United States continues and people look for less expensive housing options.
The franchise abruptly closed its Fair Oaks, California, office in August and franchisees report rarely being able to reach the co-founders, if they can get in contact at all.
Contractors, franchisees and customers are left searching for answers.
In the petition, Colton Paulhus claimed he owes more than $3.7 million to between one and 49 creditors. He listed his assets as two single-family homes and a plot of land, totaling over $1.87 million. He also included three vehicles, valued at $261,000.
Colton Paulhus’ assets amount to $2.15 million. He is unemployed with no income, according to the filing. But up until he filed earlier this month his income totaled $135,000. In 2023 he made $275,000 and the year prior he reported $248,756.
He intends to surrender two of the three vehicles, including a 2019 Bentley valued at $106,000, and one of the two homes.
Colton Paulhus notes six pending lawsuits, five of which are against Anchored Tiny Homes, for collection, breach of contract and an employee-related small claims case.
Austin Paulhus claims he owes money to between 200 and 999 creditors. His liabilities total more than $12.8 million, including $1.1 million in land and single-family houses, $3 million owed to the United States Small Business Administration and $7.9 million in unsecured claims, most of which are loans and debt guarantees for the company.
Like his brother, Austin Paulhus reports being unemployed with no income.
Colton Paulhus hasn’t returned interview requests from Franchise Times and his cell phone number is disconnected. The company’s email system is apparently shut down, as numerous emails bounced back.
In a LinkedIn message in September, the brand’s former eastern United States field business coach, Richard Howard, told Franchise Times “the business has gone under.”
“There are so many people hurt by the owners,” he wrote. “It is so wrong on many levels. I have been working with some of the franchisees in other regions of the country who had no idea what was happening at corporate, no idea about what the Paulhus’s had done, to try to rebrand and help get their dream of business ownership and building going.”
Colton Paulhus emailed franchisees August 1, when he said the “corporate situation is unfortunate.”
The email states in part, “We are in talks with a multi-brand franchisor who would step in and roll us into their portfolio,” though he didn’t offer any more details.
Anchored Tiny Homes partnered with Franchise FastLane, a franchise development company, a few months ago to grow the brand. Posts on social media and FastLane’s website about Anchored Tiny Homes have been deleted.
The development company ended its partnership with Anchored Tiny Homes “as soon as it became clear that they would not be able to deliver on their commitments,” a Franchise FastLane representative said in a statement. “ATH has made it clear that they accept responsibility for their own financial mismanagement.”
At least two contractors sued ATH in July for unpaid services.
Colton Paulhus emailed franchisees August 1, when he offered apologies and said the “corporate situation is unfortunate.”
“We are close to resolving the issue and will work tirelessly to tie up all loose ends on the corporate side,” he said.
Colton Paulhus in the email stated the corporate team was “blindsided by certain events created by our general contractors.”