Now that LJ Apparel LLC is the owner of what was Lauren James Enterprises Inc. of Fayetteville, it says it plans to grow the women’s clothing company.
“We’re probably going to stay in Fayetteville,” said attorney David Lee of the law firm Pak & Lee of Garden Grove, California, who represents LJ Apparel. “There’s a lot of moving parts. There’s a lot of things that haven’t been decided.”
LJ Apparel is fighting a lawsuit brought by First Security Bank of Searcy, which accused the newly formed company of holding a sham foreclosure sale earlier this month for Lauren James.
The bank wants Washington County Circuit Judge Doug Martin to say the Aug. 7 foreclosure sale “was a sham transaction not conducted in good faith,” according to the bank’s second amended complaint filed Aug. 16.
But Lee said most of First Security’s allegations in its lawsuit were “inaccurate, if not just plain wrong.”
Lee said that LJ Apparel was formed because Lauren James owed LJ Apparel’s parent company — which he would not name — “a lot of money.” And that debt, which was more than $330,000, was unsecured.
“We had to think about how are we going to get our money back,” Lee said.
So the plan, he said, was to form a company and contact the first position lien holder, which was Legacy National Bank of Springdale.
LJ Apparel paid $650,000 on July 27 to Legacy for Lauren James’ promissory note, which included Legacy National’s interest in Lauren James’ collateral.
Then LJ Apparel moved forward with the foreclosure sale because that note was in default. The terms of the sale called for a sealed bid with a minimum bid of $700,000.
“We took every step that it was done the right way,” Lee said.
Bank Seeks Judgment
First Security Bank, however, said it was the first position lien holder and accused LJ Apparel of acting “with the sole purpose of extinguishing First Security’s lien in the Inventory so that it could attempt to continue the operations of Lauren James free-and-clear of First Security’s lien,” the lawsuit said.
First Security said Lance Stokes, who owned the business with his wife, Lauren, and an officer of the company, Chad Dickinson, are now working for LJ Apparel.
Lee said Lance Stokes and Dickinson are employees of LJ Apparel. “This is a brand that they built, so we kind of need their help,” he said.
Nevertheless, he said, Lance and Lauren Stokes “have no interest in LJ Apparel.”
The bank, however, wants a judgment against LJ Apparel for interfering with its rights and is seeking an unspecified amount of damages.
LJ Apparel hadn’t filed an answer as of Thursday.
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