By John Howell Sr.

The City of Batesville is pursuing recovery of money loaned to Framed Picture Enterprise, Inc. through the U. S. Bankruptcy Court in the West Tennessee District and through Panola County Circuit Court, Assistant City Attorney Colmon Mitchell said.

Mitchell briefed Batesville’s mayor and aldermen during a lengthy executive session at the Tuesday meeting. Mississippi’s Open Meetings laws allow public bodies to conduct business behind closed doors in matters of litigation and contract negotiation.

The Batesville manufacturer borrowed $150,000 from the Batesville Economic Development Program (BEDP) in 2007 and $500,000 from the program in 2009 according to the case file in the office of Panola County Circuit Clerk Melissa Meek-Phelps. Scheduled payments had reduced the balances to $43,980.93 and $420,889.04, respectively, until payments stopped, prompting the lawsuit filed May 1.

Framed Picture Enterprise, doing business as Art Horizons, Inc., filed for Chapter 11 bankruptcy on May 8. Art Horizons was designated by the bankruptcy court as “debtor-in-possession,” court documents state, and continues to operate the facility. On May 25, Art Horizons filed a motion with the bankruptcy court that would allow the sale of “substantially all estate assets free and clear of liens, claims, rights, encumbrances and interests.”

The bankruptcy court document states that Art Horizons had received an offer from a prospective buyer — UMA — to purchase “the operating assets presently being used by the Debtor.” The motion also states that UMA “requires the real property being used by the Debtor to be free of all current tax liens.”
The City of Batesville, North Delta Planning and Development District and Iberia Bank subsequently filed motions objecting to the sale.

“We didn’t have enough information about what they’re planning to sell,” Mitchell said, following Tuesday’s executive session with city officials. “We want to make sure the city has priority on the proceeds from its collateral.”

The city’s motion, filed in bankruptcy court June 6, provides an extensive list of equipment used by the company in its manufacture of framed prints, posters and mirrors that was pledged by Framed Picture Enterprise as collateral for the loans it received from the city.

“North Delta has the same dilemma,” Mitchell said, over collateral pledged to secure a $150,000 loan from the development district.

The city’s lawsuit against the manufacturer targets personal guaranties for repayment the city received from business owners Ed Brucker, Isadore Brucker and Mae Brucker, Mitchell said.
The circuit court suit proceeds independently of the bankruptcy proceedings, the city attorney said.
Ed Brucker signed guaranties for both the 2007 and 2009 loans. Isadore Brucker and Mae Brucker signed guaranties for the 2009 loan.

Language in the guaranties, which are included as exhibits in the lawsuit’s complaint, state that “the Undersigned shall be … obligated to pay Indebtedness even though any other person obligated to pay Indebtedness, including Borrower, has such obligation discharged in bankruptcy …”

Art Horizons employs about 120 people, the motion filed May 25 in bankruptcy court states.
No action was necessary during the city’s executive session, Mitchell said.

Also discussed during the executive session was the proposed sale of city-owned property to Tri-Lakes Medical Center for the construction of medical offices.