Published Saturday, June 13, 2009

Creditors claim Brown Steel not paying bills

The Times-Herald

Creditors are piling on Brown Steel LLC and trying to force the Newnan-based company into receivership following a series of alleged failures to make payments on millions of dollars of debt.

The latest lawsuit, filed by plaintiff Colonial Bank of Alabama on Thursday in Coweta County Superior Court, demands "immediate appointment of a receiver and injunctive relief" against the company, located at 140 Amlajack Way in Shenandoah Industrial Park and headed by Mark A. Brown, president.

Colonial alleges that Brown Steel's debts go back to a series of loans made in 2007. Brown Steel allegedly failed to make its scheduled May 1 and June 1 payments on two separate notes totaling approximately $36,000.

The failure to make the payments "gives Colonial full right to demand payment in full on the principal amount," Colonial alleges in the lawsuit. Colonial accelerated the debt on June 2.

Brown Steel owes Colonial approximately $3,021,657, it is alleged in court documents.

"Upon information and belief, the borrower has substantially reduced or ceased its business operations and lacks any realistic prospects of fully repaying its indebtedness to its various creditors," Colonial Bank states in the lawsuit, filed by Kevin B. Getzendanner of Arnall Golden Gregory, LLP.

The company's value is "significantly less" than the amount owed to the bank, the bank alleges, and "the value of its assets is declining and will continue to decline, pending proper liquidation."

The company "ceased all communications with Colonial regarding its financial status," the bank alleges. The company has also "canceled meetings" and "locked Colonial's agents out of its facilities."

"The borrower has substantially reduced its business operations and inexplicably caused equipment and inventory to be removed from its facility," they allege.

Brown Steel LLC had about 60 employees in 2007. Attempts to contact company officials Friday were unsuccessful. A recorded message was playing on a loop. An e-mail to Brown went unanswered.

Colonial is asking the court to allow the bank to "proceed with a non-judicial foreclosure sale of the borrower's property" under receivership.

But the Colonial lawsuit is only the latest in a string of lawsuits against Brown Steel, LLC.

Also on file is a lawsuit from Southland Manufacturing, filed in Superior Court on June 3. Southland claims Brown Steel owes the company $23,938.

The company was "promised payment on numerous occasions, but payment has not been made," Southland said through its attorney, Ron Harwell.

The Fastenal Company has also filed suit against Brown Steel, complaining that the company owes Fastenal $27,321.

Subcontractor AIM Steel, Inc. filed suit against Brown Steel, claiming that the company failed to pay them for steel erection services done at the HP Data Center, 120 Satellite Blvd. in Suwanee, GA. The unpaid balance is allegedly $103,000.

Georgia Powder Coating filed suit against Brown Steel, claiming that it was not paid for two separate projects -- one for Georgia Tech in the amount of $44,496 and a second at the Georgia Dome for $3,012.

Mark A. Brown is the grandson of E.W. Brown, founder of the original Newnan-based Brown Steel Company, which now does business as Caldwell Tanks on East Broad Street. Brown Steel, LLC is a separate company and is unaffiliated with Caldwell Tanks.

A hearing was held Friday before Coweta Superior Court Judge William F. Lee but no decision on Colonial's petition had been made as of Friday evening.