Bruckers loan

Published 12:00 am Friday, October 12, 2012

City wants money loaned to Bruckers

By John Howell Sr.
Attorneys for the City of Batesville and the North Delta Planning and Development District (NDPDD) and for Iberia Bank are apparently negotiating over proceeds from the sale collateral in the Framed Pictures Enterprise bankruptcy.

Assistant City Attorney Colmon Mitchell gave Batesville’s mayor and aldermen an update last week, but in executive session.

“If it’s not settled we’ve got to try it in bankruptcy court,” Mitchell said, citing his reason for recommending the executive session.

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From its revolving economic development fund, the city in 2007 loaned the picture framing manufacturer $150,000 and in 2009 another $500,000. When the framing business, under the name Art Horizons, Inc. filed for bankruptcy earlier this year, it owed $43,980.93 on the 2007 loan and $420,889.04 on the 2009 loan. Employment was then listed at 120, according to documents filed in the U. S. Bankruptcy Court of Western Tennessee.

Art Horizons, Inc. also borrowed $150,000 from NDPDD in 2007. The amount repaid on that loan is not available.

Art Horizons operated in Batesville for many years as Framed Pictures Enterprises under the ownership and management of two generations of the Brucker family of Memphis. The facility manufactured framed wall art and other items of household decor. At the time it sought loans from the city and NDPDD, the company was seeking to expand its manufacturing capacity and capability in the face of foreign competition.

The dispute over collateral dates back to a 2006 loan from Wells Fargo Bank. Framed Pictures Enterprise, Inc. pledged “assets including, without limitation … equipment,” Iberia Bank alleges in a complaint filed July 24. The convoluted financial trail outlined in the documents states that, through a succession of entities, the collateral was assigned to Iberia Bank as collateral for loans totaling $5.7 million and $700,000 respectively.

The July 24th complaint filed by Iberia Bank states that the security interests of Batesville and NDPDD is “subordinate to Iberia’s security interest.”

In a counterclaim filed by the city on September 21, the city denies that it has a security interest that is subordinate to Iberia’s.

The collateral — much of it consisting of an assortment of wood milling, molding and cutting machinery — will be sold through a week-long internet auction that will be conducted this month, Mitchell said.

Both parties are likely to continue negotiations over a fair distribution of the proceeds, he said. The negotiations are considered preferable to spending additional money for the legal expenses required to continue the fight in bankruptcy court.

In a separate action filed in the Panola County Circuit Court May 1, the city filed suit against members of the Brucker family for the money through personal guaranties each had signed as part of the city’s loan agreements.  When none of the defendants responded, the city on June 28 asked for a default judgment against the family members.