Debts estimated to exceed $32 million
***Aug. 4, 2022 Update: Lawsuit settled between Graham County Land Company, Flexible Funding
Tallulah – The receiver seeking to recover $17 million that Graham County Land Company owes its biggest lender is now going after other assets linked to the company’s CEO, Randy Jordan.
Adding that to what the company and Jordan owe to other creditors, Graham County Land Company’s total debt comes in $32 million – and counting.
Lawyers for Flexible Funding learned that Jordan had received $605,000 in proceeds from the sale of real estate, while continuing to insist that he had no assets to repay any of the $17 million his bankrupt company owed the financing company.
The lawyers are now asking a court to allow them to go after assets of 15 limited liability companies that Jordan owns – or is partnered in – and to appoint a general receiver to oversee the liquidation.
“As it stands, Jordan has multiple creditors. In the absence of a receivership, the creditors are in a race to the courthouse to obtain a judgment and try to collect on it,” Flexible Funding lawyers said in a March 11 filing in N.C. Business Court.
Graham County Land Company is a Robbinsville-based debris removal company that had a factoring relationship with Texas-based Flexible Funding. Jordan was the company’s CEO and had guaranteed much of the company’s debt to Flexible Funding, including all the company’s obligations, lawyers alleged.
Graham County Land Company became over-advanced by over $5 million, had no money to fund its payroll or operational expenses and refused to cooperate with Flexible Funding, provide necessary financial information, or make any changes to its operations, the lawyers said.
“Flexible Funding also found evidence of fraud, misappropriation of funds, mismanagement, failure to pay subcontractors and suppliers, bad invoices, and waste, and possible voidable transfers exceeding $2 million,” Flexible Funding’s attorneys alleged in a court filing.
Graham County Land Company was placed in receivership in October 2021 in United States Bankruptcy Court for the Western District of North Carolina. Flexible Funding is primarily secured by a first-priority lien on Graham County Land Company accounts receivables.
But another $15 million is owed to other creditors.
Flexible Funding had about $12 million in purchased receivables from Graham County Land Company, but the actual value is much less.
“Flexible Funding will be lucky to receive $2 million on the remaining purchased receivables,” according to the court filing.
A bankruptcy auction – held Jan. 26 – grossed $7.73 million and netted the receiver $2.743 million after payoffs to various financing companies and other title holders.
More than 400 items – ranging from attachments to heavy equipment – were auctioned off.
Equipment ranged from a couple of 2006 Ford F-150 extended cab pickups that went for $2,000 each. Some excavator buckets went for as low as $100, while the most expensive item – a 2019 Terex horizontal grinder – sold for $450,000, but the payoff was $450,000 and the receiver received nothing.
All totaled, the receiver anticipates to be short around $10 million of the $17 million owed.
Other debts
“Flexible Funding desires to collect as much of that amount as it can from Jordan’s non-exempt assets,” Flexible Funding lawyers said.
“And while Flexible Funding is Jordan’s largest creditor, there are many others with large unsecured claims against him.
“Since Jordan appears unwilling to apply all his assets to pay his debts, and to avoid a free-for-all among Jordan’s creditors, receivership will provide an orderly, efficient, and cost-effective process for everyone and will prevent Jordan from taking actions to harm his creditors. Should Jordan disapprove, he has it within his power to control his destiny by availing himself of the protections provided by the United States Bankruptcy Code,” according to the filing.
According to a Personal Financial Statement provided by Jordan, his total guaranty obligations – separate from what he owes Flexible Funding – exceed $15 million.
Randy Jordan is personally liable to other creditors under guaranty obligations: People's United Equipment Finance Corporation, Volvo Financial Services, Caterpillar, TBK Bank, First Bank, Philadelphia Indemnity Insurance Company, National Equipment Dealers, LLC, Signature Financial, Nationwide Mutual, John Deere, Comdata, Chase, GM Financial, Wells Fargo, Ford Credit, Ally Bank, and Capital Indemnity.
Flexible Funding said it is aware of six other pending lawsuits against Jordan:
* In 2021, People's United filed an action against Jordan and others in the United States District Court for the Southern District of Texas. They assert a claim against Jordan exceeding $3 million.
* In 2021, Mitsubishi HC Capital America filed an action against Jordan and others in Graham County Superior Court. They assert a claim exceeding $694,000 plus interest and attorneys' fees.
* In 2021, TVT 2.0, LLC filed an action against Jordan and others in the Third Judicial District Court, Salt Lake City Department, Salt Lake County, State of Utah. They assert a claim exceeding $2.4 million plus interest and attorneys' fees.
* In 2021, The Original Mowbray's Tree Service Incorporated filed an action against Jordan and others in the Superior Court of the State of California, San Francisco County. They assert claims sounding in breach of contract, conversion, and fraud exceeding $5 million plus interest and attorneys' fees.
* In 2022, Volvo Financial Services filed an action against Jordan and others in Guilford County, North Carolina Superior Court. They assert a claim exceeding $1.3 million plus interest and attorneys' fees.
* In 2022, National Equipment Dealers, LLC filed an action against Jordan in Davidson County, North Carolina Superior Court. They assert a claim exceeding $100,000 plus interest and attorneys' fees.
‘Bad faith’
In November 2021, Flexible Funding asked the court to preliminarily enjoining Jordan, and all persons acting on his behalf or with him, from dissipating, transferring, or otherwise disposing of any proceeds while plaintiff conducts discovery as to the status of the proceeds. They say they fear that Jordan “has not been engaging in settlement negotiations in good faith.”
Jordan has paid nothing to plaintiff since demand was made, and since November he and partner Warren Dudly Orr sold 32.45 acres off Tapoco Road near Robbinsville. Jordan’s cut of the proceeds was $605,000.
“Jordan refuses to remit the Proceeds or place them in escrow pending the outcome of this case. Jordan admitted to spending over $108,000 on ‘various attorneys and other professionals’ and transferring approximately $450,000 to various LLCs that he controls,” the lawyers argued.
“Right now, nothing prevents Jordan from engaging in similar conduct as to the various entities he controls or as to hidden and undisclosed assets.
Appointment of a Receiver would prevent Jordan from further conduct detrimental to Plaintiff and his other creditors,” according to the filing.
Based on Flexible Funding's investigation, Jordan has interests in at least limited liability companies, corporations, and partnerships. Some of these entities own real estate or personal property, or both. They include:
* Carver Contracting, LLC
* Carolina Waste, LLC
* Tarheel Realty, LLC
* Jordan Properties-NC, LLC
* Patton Properties, LLC
* Reba Jordan Family LP
* Blue Rock Materials, LLC
* Western Materials, LLC
* Laura Properties, LLC
* Slickrock Development, LLC
* Snowbird Mountain Trout Company, LLC
* Mill Creek, LLC
* JHC Steel, LLC
* The Knight Club, LLC
* Bear Lake, LLC
“According to an internal investigation by the receiver, when Jordan ran GCLC, he routinely transferred GCLC funds (most of which was Flexible
Funding's cash collateral) to many of these entities, and vice versa, such that, in many instances, the funds became hopelessly co-mingled,” according to the filing.
“When Jordan ran GCLC, he also permitted the transfer of GCLC funds to Julie Hancock, Jeff Hancock, Shelby Hancock, James Carver, Peggy Carver, and his sons Stone Jordan and Storm Jordan. He also allowed these individuals use of Flexible Funding's cash collateral for their personal use. It does not appear that any of this was booked as income paid by GCLC or re-paid to GCLC,” the lawyers said.
Flexible Funding says it is entitled to the appointment of a general or limited receiver because Jordan is insolvent, not paying its undisputed debts as they become due, and several other similar factors.
The court may also appoint a limited receiver to protect the property from waste, loss, spoilage, transfer, concealment, dissipation, or impairment; the property and any other collateral held by the secured party are not sufficient to satisfy the secured obligation; or the debtor fails to turn over to the secured party the collateral or proceeds of collateral, including rents, the secured party was entitled to collect.