Acme Creditors Oppose 3-Branch Sale, Say Allied Assets Should Be Separate

A proposed $2 million sale of three of Allied Bank’s six branches to an unidentified buyer has drawn opposition from the largest secured creditors of its parent company, Acme Holding Co. of Little Rock.

Acme, which filed for voluntary Chapter 11 reorganization on April 29, asked the court to authorize selling branches in Mansfield (Sebastian County), Van Buren and Alma.

Chambers Bank of Danville and Hildene Asset Management LLC of Stamford, Connecticut, which together hold some $7.8 million in secured debt, have questioned the legality of such a sale from bankruptcy court.

Chambers and Hildene also have taken issue with the lack of details and supporting documentation about the proposed transaction.

Acme doesn’t name the proposed buyer of the three Allied Bank branches, citing a confidentiality clause in the undisclosed contract.

Some bank sources pointed to Today’s Bank of Huntsville as the potential buyer.

“We’ve had some talks with them, but we have nothing on record,” said Larry Olson, president and CEO of Today’s Bank. The $99.4 million-asset lender changed its name from First State Bank of Northwest Arkansas on March 31.

Allied’s Mansfield office dates back to the $6.8 million purchase of the Bank of Mansfield in September 2001. The Alma branch opened in May 2005, and the Van Buren branch was opened in March 2006.

The three locations are home to an estimated $53.6 million in deposits, representing 43 percent of Allied’s total deposits and half of the bank’s active branch network.

Allied also operates full-service locations at its main office in Mulberry (Crawford County) and branches in Ozark (August 2002) and Little Rock at 4900 Kavanaugh Blvd. (February 2011).

The bank owns a second Little Rock location at 1022 W. Capitol Ave. in downtown, which was closed in March after 15 years of operation.

Acme lists secured debts of $7.8 million and unsecured debts of nearly $3.6 million.

Those total debts of about $11.4 million are counterbalanced by claimed assets of $12.2 million.

The biggest asset is a $12 million valuation of Acme’s ownership of Allied Bank, a $138 million-asset lender controlled by the family of Lex Golden.

The bank had total equity capital of $10.5 million as of March 31.

Chambers Bank, Acme’s largest secured creditor, is owed $4.5 million on two loans dating to September and December 2010, according to Acme’s up-dated bankruptcy filing.

In its objection to the proposed sale, Chambers describes its claim as more than $4.5 million, secured by Acme’s ownership of all of the Allied Bank common capital stock.

Hildene Asset Management, with its Hildene Opportunities Master Fund Ltd., is the second-largest secured creditor, at about $3.3 million. The Hildene debt is tied to principal and interest owed on trust preferred securities issued for the benefit of Acme Holding on March 26, 2003.

Hildene took issue with the undisclosed identity of the branch buyer as part of an undisclosed plan of reorganization by Acme. Hildene questioned whether the purchase price was reached in arms-length fashion and reflected fair value. Its filing with the bankruptcy court noted the absence of supporting information about the proposed transaction:

“Rather than approve a rushed sale shrouded in secrecy, Hildene and HOMF request the court instead deny the motion and direct that the debtor be required to institute a full and fair bidding process to ensure that the maximum value is secured for the assets …

“The proposed sale that Acme is seeking approval for in the motion may represent the best deal possible, or it may not.

“But the only way to ensure that this occurs is if the court allows for an open and fair auction process.”

The opposition by Chambers Bank laid out a more fundamental argument: The court shouldn’t permit the sale became Acme Holding doesn’t own the Allied Bank branches.

Acme Holding owns the controlling shares in Allied Bank, but the bank isn’t a party to Acme’s bankruptcy.

Under bankruptcy law, the bank’s assets are separate from the holding company.

That’s a position shared in separate objections filed by the Arkansas State Bank Department and the Federal Home Loan Bank of Dallas.

The proposed branch sale advocated by Acme Holding also would involve “certain loans” delivered at book value.

Chambers Bank also raised concerns about the “cherry picking” of Allied Bank assets in its objection to the proposed transaction.

Who Owns Acme Holding Co.?  
Acme Employee Stock Ownership Plan 41.12%
Lex Golden, chairman & CEO 21.39%
Tom Gibbons 21.14%
Alex Golden, president 7.73%
L.J. Muncy Jr.* 2.56%
Amy Golden McCay 1.90%
Alex Golden Children’s Trust 1.64%
Amy McCay Children’s Trust 1.64%
Andy Waldo 0.55%
Marion and Sandra Driscoll 0.35%
*Includes 1.53 percent held through the Acme Employee Stock Ownership Plan

 

Other Creditors

Acme’s schedule of creditors also lists four unsecured claims totaling more than $3.5 million.

At the front of the line is a $164,922 claim by the Internal Revenue Service related to 2013 taxes.

The biggest unsecured claim Acme listed is $2 million by Axys Capital Management of Austin, Texas.

The debt, which matured on Dec. 31, is secured by ownership of the $25.6 million-asset Community State Bank of Bradley (Lafayette County).

The bank was purchased for $3.15 million in September 2010. It recorded a loss of $75,000 during the first quarter of this year and an $18,000 profit for 2013. Established in 1933 as the Bank of Bradley, the lender’s current name came in 2002.

Community State Bank is owned by Allcorp Inc., which is led by the Lex Golden family.

According to Acme’s bankruptcy paperwork, Golden and his wife, Ellen, personally guaranteed the Axys debt, and the Chambers debt and more than $1.4 million in unsecured debt held by the Batesville branch of Southern Bank of Poplar Bluff, Missouri.

The Southern claim is tied to unpaid interest and principal on loans to the Acme Employee Stock Ownership Plan directed by the Goldens.

Rounding out the unsecured creditors listed by Acme Holding is the Arkansas Department of Finance & Administration, an unspecified claim described only as contingent, unliquidated and disputed.

Acme paid $33,787 to retain the legal services of the Bond Law Office in Fayetteville for the Chapter 11.

The holding company, its ESOP and Allied Bank have operated under a supervisory agreement with the Federal Reserve Bank of St. Louis since May 2012.

During the past 12 months, Allied’s portfolio of real estate recovered from bad loans climbed from $7.5 million to more than $11.2 million. The bank recorded a loss of $118,000 in the first quarter after posting a nearly $3.5 million loss for 2013.

The fortunes of Acme Holding have tracked with Allied Bank. Acme lost more than $10.2 million during 2011-13.