Mark Stark, chief executive of Prudential Americana Group, one of the largest real estate brokerages in Las Vegas, said he was discouraged when he realized he had no alternative but to file Chapter 11 bankruptcy if he wanted to save his firm, which continues to operate while it reorganizes it debt.

"I was bummed," Stark said. "I was bummed."

The Nov. 27 bankruptcy filing was quite a comedown for Stark, 44, who said he took to the business like a "fish to water" when he obtained his real estate license and worked as an agent for Americana Group starting in 1985. He was prompted to go into the business by a fluke suggestion from his roommate when Stark was studying hotel management at UNLV.

When he took over 100 percent of the ownership of the brokerage in 2004 from his 25 percent stake, Stark said he never envisioned the Las Vegas housing market tanking like it did and making it impossible to make payments on one of the two loans totaling $22.5 million he took out to buy out his partners.

Stark hopes to reemerge from bankruptcy protection within six months with new financing that will reduce his debt and give his company a chance to succeed.

"It is a timing issue," Stark said. "We are overleveraged. I certainly didn't buy the company with the hope of this and turning down a big check."

That's quite a contrast from three years ago when Prudential Americana had an offer from Warren Buffett's HomeServices of America to buy the firm. Stark matched the offer.

"I would have gotten a huge check and with bonuses — it would have been $12 million to $15 million at the time," Stark said. "I said no, and the reason being is I had a belief as I do today. That is why we have done well in a tough environment, and we have hung in there. Most companies that have gotten hit as we have in this market don't make it through."

Because the Las Vegas firm is the seventh largest in the Prudential network, Stark said he was eyeing going public and looking at growth outside of Las Vegas.

His firm had an administrative staff of 118 at the height of the market two years ago and had 1,500 agents. Since then, overhead has been cut with the decline in the market. The administrative staff is down to 78 people and there are 1,200 agents. The firm is shedding 25 to 30 agents a month, and that trend is expected to continue in 2008.

When he acquired the firm, Stark said he had a plan that if the market adjusted 30 percent, the brokerage would still be fine.

"The market adjusted more dramatically than we anticipated," Stark said. "If you would have told me, this market would have gotten hit 67 percent in two years, I would have said you have no idea of what you're saying. No one expected two-thirds of the market to go away, and now we have to work through it, and that's what we are doing."

Operationally, the firm is making a profit and continues to increase its market share that stands at 15 percent, Stark said. The firm primarily handles sales of existing homes, but also does commercial real estate and new home sales.

This isn't a case of a company overexpanding when the market was hot by building new offices or signing more leases. The firm has had six offices for a while, Stark said.

The problem was paying for the debt because the housing market started its decline right after he purchased the firm in 2004.

Stark borrowed $10 million from Zions Bank of Salt Lake City, the primary lender, and $12.5 million from Peninsula Capital Partners of Michigan.

Zion, which is owed just under $5 million, had the right as the senior lender to block payments to Peninsula to protect the brokerage and future payments to Zion.

"(Zion officials) called and said they wanted to protect Zion and the company," Stark said. "You keep the money in the company and continue paying our payment and stop making the payment to (Peninsula)."

In return, Peninsula, as it had a right to do, increased the interest rate to 19 percent from the 12 percent to 15 percent level where it had stood, Stark said. That wasn't going to work for long, he said.

Prudential Real Estate, the national franchisor, stepped in to work out a deal to assume the debt but Peninsula rejected the offer, Stark said.

"We tried to work a win-win scenario, but we could not get there. Peninsula said no because there was a discount involved. Over time, it would have been fine, but it wanted more."

Stark said he had a decision to make on the company's future. The compounded interest of 19 percent on a debt of $14 million loan would ultimately mean Peninsula would own the brokerage via debt.

"That was not OK and so that forced the situation," Stark said.

In bankruptcy proceedings, the brokerage is seeking the court's approval to allow Prudential to assume the debt as a way to reduce the firm's burden.

The decision lies with the U.S. Bankruptcy Court, but Stark is optimistic it will be resolved, and the company will emerge stronger than ever and take advantage of opportunities to add brokers and agents and to increase market share.

The lesson for Stark is that scenarios can unfold that can't be expected. Only having a crystal ball could have prepared him, he said.

"I don't see what if anything we could have done differently to protect the company," Stark said. "We didn't add a lot of bricks and mortar. We didn't waste dollars. We were healthy. We were very profitable until the market went away."

Although the housing market remains slow, Stark said the future remains bright for Las Vegas because of job and population growth and a good economy.

There was a perfect storm setting up Las Vegas' fall: exuberance in the market, investors making up about one-third of the market, people getting loans who shouldn't have qualified, low interest rates and the booming economy. The credit crunch put it over the top, he said.

"We have a core economy that is healthy, but we now have a timing issue," Stark said. "We have to work through this slop that has created challenges. This inventory will be eaten up because we have a core economy. This is not Detroit, Michigan."

The No. 1 problem to deal with is perception, Stark said. There are great deals to be had in the market, but the perception of many is that prices will keep falling.

"If you are waiting until the market gets better, then sellers have the idea of things getting better and they can hold more firm," Stark said. "Today, you can go out there and sellers aren't so sure. If you wait, you are going to pay higher prices."