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American Glass & Metal Defaults on 'Accelerated' Loan, Closes Its Doors

Post Time:Mar 15,2012Classify:Company NewsView:197

 

It has become a familiar story in the last few years: a major glazing contractor completing a number of large projects defaults on its loans when its lender "accelerate[s] [its] loan and demand[s] payment in full of all liabilities."

 

In a recent case, the victim of banking run amok was 30-year-old glazing contractor American Glass & Metals Corp. (AGM) of Plymouth, Mich., which closed its doors in 2010, and only in November 2011 settled a last lawsuit with its bank in which AGM was a third-party plaintiff.

 

AGM had ranked at number 26 in the March 2010 USGlass Big Book of Lists with 2009 sales revenue of $12.2 million.

 

According to court documents, AGM originally obtained secured financing from Citizens Bank, which in June 2010 sold and assigned to Windmill Holdings Inc. all of its rights in financing documents.

 

The documents state that "AGM's obligations under the Financing Documents are secured by valid first priority liens and security interests in substantially all of AGM's assets, which includes inventory, equipment and accounts receivable, among other collateral."

 

The documents note that as of March 31, 2010, AGM was in default under those documents. "Accordingly, Citizens, the original lender, exercised its rights under the Financing Documents to accelerate the loan and demand payment in full of all liabilities from AGM and the guarantors."

 

As of September 1, 2010, when the case was filed, $570,664.21 in principal and interest was due to Windmill, plus fees, costs, reimbursements, and attorney and consultant fees, which continued to accrue.

 

The case in question was brought against Hanover Insurance Co., which had provided payment and performance bonds for certain AGM projects. However, Windmill alleged that Hanover failed to perfect any interest in AGM's inventory, equipment, or accounts receivable. By failing to file a UCC-1 financing statement against AGM with the correct authority, which would have given Hanover precedence in the collection process when defaulted, Windmill states that Hanover's rights as an unperfected secured creditor "are junior in priority to Windmill's rights in the Windmill Collateral."

 

In November 2011, the judge ultimately ordered that Windmill's claims against Hanover Insurance Co. be "dismissed with prejudice and without costs" and that Hanover's third-party claims (the third parties being AGM, Vogelsberg Family Real Estate Investment Co. LLC, James Vogelsberg and Shelly Vogelsberg) dismissed "subject to the terms of a settlement agreement and mutual release between such parties."

 

In November 2011, AGM also was taken to court by the Michigan Glass and Glazing Industry Defined Contribution Pension Plan; Michigan Glass and Glazing Industry Welfare Insurance Fund; and International Painters and Allied Trades Industry Pension Fund for a breach of the fringe benefit provisions of collective bargaining on the part of AGM. According to court documents, AGM "owed $79,778.96 in audited indebtedness for the period of January 2008 through July 2010. Plaintiffs have collected $66,338.74 against the audited indebtedness, for a balance due of $13,440.22. Despite demand, defendant has refused to pay the balance due." That case is still ongoing.

 

Company president James D. Vogelsberg confirmed to USGlass that the company is no longer conducting business, but declined to comment on details of the closure. "We did nothing wrong, but ran into the paranoid bankers of 2010," he said.

 

Source: http://www.usgnn.comAuthor: shangyi

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