Nearly seven years after receiving a state-touted $8.7 million low interest loan for opening a manufacturing operation in Gary, the owners of a Crown Point-based business are seeking to reorganize their debts after filing for bankruptcy.
Representatives of IB&B LLC, which operates Illiana Block & Brick, filed a voluntary petition for Chapter 11 bankruptcy reorganization Nov. 14 in U.S. Bankruptcy Court in Hammond. At the time, IB&B said it had $2.36 million in assets and $16.27 million in liabilities.
William Critser, part-owner of IB&B, said it's too early to determine what will happen in the reorganization process, but that the company has kept employees working and operations are continuing through the bankruptcy proceeding.
Critser said he would like to see the business continue operating with a smaller debt load and believes the company's economic condition is moving in the right direction. Negotiations also are ongoing with creditors.
"We're hoping everything will be turned around. We'll be able to survive and turn things around," Critser said.
BMO Harris Bank, which is IB&B's largest creditor and only secured creditor, claims it is owed more than $11 million from a credit agreement, additional financing provided through loan agreements and overdraft fees, according to court records. A bank spokeswoman declined to comment on the matter.
Among the largest creditors not affiliated with the business are Leo DeWolfe, of LaPorte, seeking $915,941.43 for obligations owed for a Michigan City property purchase, the International Brotherhood of Teamsters Local 142 seeking $316,187 for unpaid pension payments and other benefits and the Indiana Department of Revenue seeking $154,591.56 for unpaid sales taxes.
In 2006, state officials lauded IB&B for starting construction on a Gary facility to produce concrete products for construction. The move was seen as one that would create at least 20 jobs for a firm that also had operations in Michigan City and South Bend.
The Gary facility, which is near East 5th Avenue and the Indiana Toll Road, was completed in 2007. Critser said the business was gaining market share prior to 2009 and employed as many as 30 people. But the brunt of the recession reduced construction activity and reduced earnings.
The company employs about 10 people currently, he said. Since that time, the South Bend operation has closed and the property is Michigan City is being leased to another business. He said issues with IB&B are separate from another business he leads, Gary Material Supply LLC, located on West 15th Avenue in the city.
Questions about Critser receiving the loan surfaced after The Times learned in 2006 that the state authorized the loan although he pleaded guilty in federal court in June 1997 to using a phony billing scheme to bilk the operator of the Gary Sanitary Landfill with "ghost" shipments of clay. His businesses also have received criticism after concerns he hired family members of key Gary figures including former Mayor Rudy Clay to help secure city work contracts. Critser denied the allegations.
The Indiana Finance Authority also signed off on the deal although the firm opened three years earlier, according to records of incorporation filed with the Indiana Secretary of State's office.
Andy Kienle, legal counsel for the Indiana Finance Authority, said certain bond programs through the authority allow borrowers to take advantage of obtaining financing for lower interest rates, which can be a carrot to convince business owners to conduct expansions or build up new operations in certain areas. The bonds could have allowed IB&B to receive the bank loan, he said.
But in the case of the IB&B, the IFA likely served as a pass-through entity, only reviewing the terms of the financing and ensuring state laws were met, Kienle said. He said the agency isn't responsible for credit reviews or completing due diligence on borrowers. Taxpayers are not on the hook if the borrower defaulted in this case because the state didn't fund the transaction, he said.
Critser's firm also didn't receive any performance-based tax credits from the Indiana Economic Development Corp., said agency spokeswoman Katelyn Hancock.