A sign at a construction site promotes a new Speedy Splash Car Wash location.
A Springdale construction company owner who filed for bankruptcy last year is accused by creditors of diverting money to pay personal expenses.
The McLain Group LLC of Fayetteville and its entities have filed three lawsuits in the Chapter 7 bankruptcy case of Warren Wheat, owner of W. Wheat Construction LLC, to block him from discharging the debt owed the companies.
Warren Wheat filed for bankruptcy liquidation in November and listed assets of $143,420 and debts of $2 million. From Jan. 1 through Nov. 22, 2019, the day Wheat filed for bankruptcy, Wheat reported $132,230 in gross income.
In 2018, two of the McLain Group’s entities hired Wheat Construction to build a Speedy Splash car wash in Lowell and another one in Tulsa.
In April 2019, McLain’s entities, Arlow Bloomington LLC and Oktul 71ST LLC, each said in their lawsuits that they learned the money they paid to Wheat was not used by him or his company on the projects. Instead, the companies allege, the money was “misappropriated” by Wheat and his company “and otherwise diverted for other purposes.”
Wheat allegedly diverted money for the car washes to other projects and his personal expenses, according to the lawsuits filed by Conway attorney Gary Jiles.
Both entities alleged Wheat misappropriated more than $216,400 of the payments made for the projects.
As a result, the companies were forced to pay the unpaid subcontractors and materialmen to protect the projects from materialmen’s liens, the lawsuits said.
Before Wheat filed for bankruptcy, Oktul received a judgment against him and his construction company for $421,663. The lawsuit Arlow had filed against Wheat and his company was put on hold because of the bankruptcy.
In December, Jiles asked U.S. Bankruptcy Judge Ben Barry not to discharge Wheat’s debts to his clients.
Collateral Damage
The McLain Group has a different beef with Wheat.
In April 2019, the McLain Group let Wheat Construction borrow $48,000 for three days. Wheat also personally guaranteed the loan and provided collateral, Jiles said in the suit. The McLain Group alleged that after Wheat defaulted on the loan it discovered that the collateral “either largely never existed in the first place” or had been sold.
The McLain Group also wants Judge Barry to order that debt isn’t dischargeable. If the suits succeed, Wheat would be left with those debts after the bankruptcy process.
Wheat, who is represented by attorney Stanley Bond of Fayetteville, denied the allegations in the lawsuits. He also asked that the cases be dismissed.
Bond declined to comment because the suits are pending.
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