Bankruptcy Filing Follows Moosehead Closure



AUGUSTA — The Jan. 21 auction of the real estate, mill and assets of Moosehead Manufacturing ended before it could begin when Tardy-Connors Group LLC filed Chapter 11 bankruptcy in Bangor.

 

Rep. Josh Tardy (R-Newport), the House Minority Leader, Maine State Chamber of Commerce President Dana Connors and Ed Skovron, a small businessman from Rhode Island, are the principal owners of Moosehead Manufacturing.

The foreclosure auction was organized by the company’s principal creditor, Machias Savings Bank, and was advertised and run by Keenan Auction Co. of South Portland.

The three men purchased the remains of Moosehead Furniture — after the business had been closed for approximately six months due to failing sales —from John Wentworth. Wentworth’s family began the company 60 years ago and operated mills in Dover-Foxcroft and Monson.

Tardy-Connors Group LLC bought only the Monson mill and assets for approximately $2.2 million, Wentworth said recently. Tardy would not confirm the sale price.

The land, buildings and business equipment are assessed by the town of Monson, which is owed back taxes totaling more than $70,000 by Tardy-Connors Group LLC. Two parcels carry a $68,000 valuation and buildings are assessed at $1.36 million. Machinery is assessed by the town at $1.22 million.

The value of the remains of Moosehead will play out in a Chapter 11 bankruptcy, where debtors must prove to the court restructuring is possible. Tardy-Connors Group LLC is represented by Joshua R. Dow, Pearce & Dow, LLC, Portland.

Dow would not comment on the bankruptcy filings.

The same was true of attorneys representing creditors. Michael S. Haenn of Bangor represents Machias Savings Bank. Marshall J. Tinkle of Tompkins, Clough, Portland, represents Coastal Enterprises Inc of Wiscasset.

However, other bankruptcy attorneys explained the abrupt end to the foreclosure auction — on the day it was scheduled — most likely signals a breakdown in negotiations between Tardy-Connors Group LLC and its creditors. When preplanned foreclosures auctions instead turn into bankruptcy filings, it can signal either a buyer has been found or new investors have been found or that the debtors were displeased by the terms of the foreclosure.

Tardy-Connors Group LLC will have to prove it can restructure the business and to do so will be listing all assets with the court. Filings are due in early February and a meeting of creditors is scheduled in March.

The list of the top 20 unsecured creditors has been filed at the Bangor courthouse. Creditors who did not secure their transactions with Moosehead Manufacturing range from the Maine Department of Labor to the Central Maine Power to Aetna, and equal more than $338,000 in debts (see accompanying list).

Moosehead Furniture owes the town of Monson 2008 and 2009 real estate taxes totaling $40,381. Moosehead also owes the town $34,573 in personal property taxes.

Ed Hennessey, president of Machias Savings Bank, and Stef Keenan, of Keenan Auction, both indicated buyers were on hand for the entire mill.

An online auction that began at 10 a.m. to coincide with the live auction showed more than 600 lot items available to the highest bidder. Within an hour, however, the site recorded only three items would be sold due to bankruptcy filings. Bids closed on a 2001 John Deere tractor for $42,000, a Benson aluminum flatbed sold for $11,000 and a 2000 Kenworth Road Tractor and Sleeper semi-truck sold for $6,700.

According to Hennessey, the auction had drawn more than 200 registered bidders.

It’s not common for a foreclosure auction to end before it begins, Keenan said. In his more than 30 years of presiding over foreclosure auctions, he has seen a handful of auctions be postponed as the owners file bankruptcy in the eleventh hour.

Machias loaned Tardy-Connors Group LLC some $765,000 in 2007, according to a press release issued by the Finance Authority of Maine in August 2007. FAME provided insurance on the loan, which included $100,000 working capital and $665,000 for assets. Machias has not filed a claim on its loan to Tardy-Connors Group LLC.

“My guess is we would have been able to sell for more than what was owed,” Hennessey said Friday. “Now we go back and regroup, but if they can get restructured it is fantastic.”

“This happens in auctions, although it’s not very common,” Keenan said of the last-minute cancelation. “The unfortunate thing is the buyers. They come in good faith from all across New England and the region. They are out time, expense and money. On the flip side the owners feel there is hope.”

A meeting of Tardy-Connors Group LLC’s creditors is scheduled in federal bankruptcy court on March 4. All creditors must present proof of claims by June 2.

 

Top 20 Unsecured Creditors in Tardy-Connors Chapter 11:

Twenty top creditors listed with the bankruptcy filing range from:

  1. Dwain Allan, Dover-Foxcroft $63,117
  2. GMC Hardwoods, Massachusetts, $35,150
  3. Lander and Sons, Dover-Foxcroft, $27,002
  4. Pride Manufacturing, Wisconsin $22,980
  5. Aetna, South Portland, $21,591
  6. Dawn McPherson Allen, Dover-Foxcroft, $20,000
  7. Central Maine Power, Augusta, $18,203
  8. Hardwood Products, Guilford $18,203
  9. Don Macumber, Mass., $17,682
  10. Jay M Link II, Portsmouth N.H., $16,676
  11. BH Panel, Asheboro, N.C., $13,320
  12. Janet Sawyer, Dover-Foxcroft, $11,447
  13. J Group Advertising, Bangor, $10,000
  14. The Valspar Corp., Chicago, $9,955
  15. Volk Packaging, Biddeford, $8,851
  16. Land Air Express, Vermont, $7,493
  17. State of Maine Department of Labor, Augusta, $6,778
  18. Gordon Webb, New York, $5,833
  19. Pleasant River Lumber, Dover-Foxcroft, $5,293
  20. Gilman Electrical Supply, Newport, $5,124.

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