Representative Josh Tardy, 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 Company 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, represent Coastal Enterprises Inc., of Wiscasset.
“The liabilities overshadow the value of the assets, unfortunately, there is no doubt about it,” Haenn said.
“The concern is that the bankruptcy filing serves a purpose and if it does, and if Moosehead can begin operating again, there is nobody that is going to be dissatisfied with that result.”
Other bankruptcy attorneys, however, 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 Dept. of Labor to the Central Maine Power, to Aetna, and equal more than $338,000 in debts.
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 $6700.
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 11th 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 cancellation. “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.
Creditors can request a relief from stay from the court in situations where it appears the debtor cannot restructure. Also, the Office of the U.S. Trustee, represented by Jennifer Pincus and Stephen Morrell, will review the bankruptcy proceedings and ensure the integrity of the process. Trustees oversee administrative functions related to federal bankruptcy filings, and ensure compliance with applicable laws and procedures. Trustees also investigate bankruptcy fraud.
Top 20 unsecured creditors in Tardy-Connors, Chapter 11
Twenty top creditors listed with the bankruptcy filing range are:
Dwain Allan, Dover-Foxcroft – $63,117
GMC Hardwoods, Mass., – $35,150
Lander and Sons, Dover-Foxcroft, – $27,002
Pride Manufacturing, Wis. – $22,980
Aetna, South Portland, – $21,591
Dawn McPherson Allen, Dover-Foxcroft, – $20,000
Central Maine Power, Augusta, – $18,203
Hardwood Products, Guilford – $18,203
Don Macumber, Mass., – $17,682
Jay M Link II, Portsmouth N.H. – $16,676
BH Panel, Asheboro, N.C. – $13,320
Janet Sawyer, Dover-Foxcroft, – $11,447
J Group Advertising, Bangor, – $10,000
The Valspar Corporation, Chicago, Ill. – $9955
Volk Packaging, Biddeford, – $8851
Land Air Express, Vt., – $7493
State of Maine Department of Labor, Augusta, – $6778
Gordon Webb, N.Y. – $5833
Pleasant River Lumber, Dover-Foxcroft, – $5293
Gilman Electrical Supply, Newport, – $5124
