Springfield Granite files repayment plan

The Chapter 11 reorganization plan, filed Sept. 25 in Missouri Western District bankruptcy court by owners John “Scott” and Tracy Hardwick, asks for 10 years to pay off the company’s $1.45 million in debts – an unusual request, according to Springfield Granite’s attorney, David Schroeder.

Typical reorganization plans call for only partial repayment – anywhere from 5 percent to 50 percent, he said.

“The plan provides that the payments would start immediately to the secured creditors, and the quarterly payments would begin at the end of the first quarter of 2006,” Schroeder said, adding that meanwhile, “the company continues with operations in its normal course of business.”

The filing comes eight months after Springfield Granite’s Jan. 31 Chapter 11 bankruptcy filing. The company twice requested and received extensions to the deadline to file its plan – July 15 and Aug. 15.

That led secured creditors Great Southern Bank and Northland Capital Financial Services LLC to request the case be converted to Chapter 7, essentially liquidating the company’s assets and shutting its doors. The fate of that motion will be decided during an Oct. 27 hearing, along with a decision on the proposed reorganization plan.

Lathrop & Gage attorney Dan Nelson, representing Great Southern, said the bank is still looking at the reorganization plan to determine its response. Great Southern is owed about $450,000.

“If the debtor’s projections of income and expenses are correct – and that’s the big question – on its face (the plan) appears to be feasible. We’re going to have to really dig into the numbers and take a look at it to see if that’s the case,” he said. “We’re trying to keep an open mind and give them the benefit of the doubt, but it’s going to take some close scrutiny.”

Under the plan, approximately $700,000 in general unsecured claims would be paid without interest in quarterly installments during the next decade. Secured creditors would be paid off, with interest, in monthly installments over five years. Tax claims of approximately $300,000 would be paid off with interest monthly over a six-year period.

There also is a disputed claim, not in the plan, for two equipment leases totaling $600,000.

All creditors have until the Oct. 27 hearing to file any objections, along with ballots approving or rejecting the plan. The court will consider that information in making its decision.

The court also rejected the Unsecured Creditors Committee’s request to have a Chapter 11 trustee appointed to handle the reorganization. In his ruling, Judge Arthur Federman said he felt it was in everyone’s best interest to allow the debtor to get an answer on its plan.

“I heard no evidence that anyone is being harmed to a great extent by the present operations,” Federman said in the ruling. “Since debtor’s president has shown the ability to build a business, this court will give him the opportunity to confirm a plan or sell the business.”

That sale may still happen; Springfield Granite is looking into a purchase offer received Sept. 28, Schroeder said.