Hennepin Steel Site Salvage Halts Over Legal Issues
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| Image credit: News Tribune |
Marino said Hennepin Industrial Development and IPS Steel of Michigan came to a mutual agreement on Friday that demolition will be halted until further notice, as Hennepin Industrial is in the process of refinancing so it can close the loan of what’s owed to IPS — approximately $14 million.
IPS, former owner of the site from 2014 to January 2017, filed the complaint in federal court in Peoria against Hennepin Industrial Development, Marino Development and William Marino. The amended complaint was e-filed Oct. 12.
Hennepin Industrial, the owner demolishing the old steel plant and salvaging scrap metal in Hennepin, purchased the property from IPS this winter, on seller financing.
IPS states in the complaint that there has been a breach of a contract out of the sale to Hennepin Industrial at the purchase price of $20 million.
When IPS purchased the property in 2014, the purchase price listed on the deed was about $13 million, according to a past article from the NewsTribune.
“We disagree with everything in the complaint,” Marino said. “We look forward to an amicable solution and moving forward with the project.”
IPS in the complaint says it provided money for the sale to Hennepin Industrial with the expectation there would be repayment from the salvage and sale of the scrap metal on the property. IPS has a security interest in the scrap metal on the property, the complaint says.
The complaint says Hennepin Industrial has failed to meet the payment obligations, and “has stolen valuable scrap metal, and has, through subterfuge and deceit, deprived IPS of the benefit of its bargain causing substantial damages.”
The complaint says Marino estimated the scrap value on the property at $34 million. It states Hennepin Industrial agreed to an initial earnest payment of $250,000 and an additional $4.75 million due at closing in January. IPS says Hennepin Industrial agreed to pay minimum quarterly payments of $3.75 million plus accrued interest, less any payments made to IPS as part of revenue sharing.
The members of IPS include Ishvar Sutariya of Michigan, Pravin Sutariya of Michigan, Bharat Sutariya of Missouri, Pravin Monpara of Pennsylvania and Blue Steel Industries in New Jersey.
Sellers want their money now
In January, Hennepin Industrial signed a promissory note — a contract with a promise to pay a certain amount of money on demand by a certain time or over a period of time — and security agreement related to the seller-financing, according the complaint.
The note from January stated the agreed upon seller-financed amount was $17.5 million with a 10 percent interest rate compounded quarterly, according to the complaint.
The note said the creation of a joint bank account to deposit all gross revenue earned from the property was required, according to the complaint.
The complaint says IPS could withdraw 80 percent of the deposits from the account on a weekly basis.
Source: News Tribune