November 10, 2012


Preble sues Bestdeck over $288K loan

Town gave company development loan in 2006 on condition it create 40 jobs

Staff Reporter

PREBLE — The town is suing Bestdeck to recoup a nearly $300,000 startup loan it gave the company in 2006 that was supposed to help create 40 jobs, some of which never materialized.
The town and Bestdeck entered into a $288,000 loan agreement with Bestdeck in February 2006.
Bestdeck owner Karl Ochs, who is a defendant in the lawsuit, signed a personal guarantee.
The money was awarded to the state from the federal government to disperse among municipalities to fund job growth.
In the agreement, Ochs “unconditionally guaranteed to plaintiff the payment and performance of all obligations” of Bestdeck under the initial agreement, the lawsuit states.
Ochs would not comment and referred questions to a Bestdeck spokesperson.
The lawsuit, filed Oct. 18, states that Bestdeck was supposed to create and sustain 40 full-time jobs within three years.
That never happened, said town Supervisor Jim Doring.
Bestdeck, a subsidiary of Bestway, closed its Preble facility this year, moving its operation to the Bestway facility on Luker Road in Cortlandville.
“They were not able to comply with the outline agreement,” Doring said. “The grant came in our name, and we gave Bestdeck the money to open up a business. They did not perform accordingly to what the grant states.”
Bestdeck is now on the hook for $288,000, with interest from Aug. 15 forward that is to be negotiated, according to Bernie Thoma, of Thoma Development.
The funds were provided to Bestdeck as a deferred payment loan with repayment not required in the event Bestdeck met the contingencies set in the agreement.
Bestdeck was supposed to renovate the building at 7209 Route 281, open the business and create 40 full-time jobs, Thoma said.
Bestdeck met two of the three goals, but according to spokesman Andrew Porter, the company did not produce 40 jobs. It is estimated that Bestdeck employed between 20 and 25 people, and that prompted the lawsuit.
Bestdeck has defaulted on the loan, according to the lawsuit, of which not a cent has yet been paid.
Bestdeck is also on the hook for all of Preble’s “reasonable attorney’s fees,” the lawsuit states.
Had Bestdeck met all three requirements, it would not have had to pay back the loan.
Doring said Bestdeck had up to three years to meet the requirements. When the company was unsuccessful at creating and sustaining the jobs, it asked for an extension, which was granted.
“They still didn’t do what the agreement stated,” Doring said. “They came into Preble and set up, but didn’t go much beyond that.”
In a phone interview, Porter spoke largely off the record.
“I’ll let the facts stand where they are right now,” he said. “I cannot really speak to much of what’s in the lawsuit as of this time.”
Porter later sent an email to a Cortland Standard reporter with some explanation.
“We feel it’s unfortunate,” Porter said in the email. “We worked hard to make our business successful. We employed people and invested millions of dollars into an ultimately unsuccessful venture. We hoped to avoid this situation by working with the town of Preble and we think it’s unfortunate that they chose to pursue this course of action. We will withhold further comment until all details are known.”
Don Armstrong, Preble’s town attorney, declined to comment on the case until it is settled.


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