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AmerLink seeks change of venue

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By Christopher Brooke, Reporter

RICHMOND — A company sued by Carroll County for the return of 32.4 acres used as an incentive in a failed economic development deal has asked that the case be consolidated with AmerLink's bankruptcy.

The deal with AmerLink was supposed to create 200 jobs and $3 million in investment in Carroll County, but the log home manufacturer only created one job in four years.

AmerLink, a subsidiary of Harlingen Holdings, had received $600,000 in state incentive funds and the 32.4 acres of land from Carroll County as part of the deal.

AmerLink deeded the land to Pro-Form Construction, also a subsidiary of Harlingen Holdings.

Last fall, Carroll County filed suit against AmerLink, Harlingen and Pro-Form Construction for breach of contract for failing to meet the requirements set out for the company in the economic development effort.

The lawsuit in Richmond City Circuit Court sought the return of the $600,000 in state funds and the land from AmerLink.

Since then, AmerLink has filed for Chapter 11 reorganization in the U.S. Bankruptcy Court in the Western District of North Carolina. Carroll County is named as a creditor in the bankruptcy petition, due to the incentive funds that had originated from the Virginia Tobacco Commission and the Governor's Opportunity Fund.

Owing more than $20 million to more than 200 creditors, AmerLink continues seeking Chapter 11 bankruptcy protection in an attempt to reorganize and continue operations.

The performance agreement between Carroll and AmerLink gave jurisdiction to the Richmond City Circuit Court for any litigation arising from the deal.

AmerLink had agreed on the terms between the parties to "reconvey the industrial property" to the county if the company failed to build the promised sawmill, planer mill and log home facility and begin full-scale operations, according to Carroll's lawsuit filed with the Richmond court.

It's in this suit that Carroll County also seeks to terminate the 99-year lease at the Southwest Virginia Farmers' Market for model homes built by AmerLink.

With AmerLink seeking bankruptcy protection in North Carolina, Pro-Form officials as of May 11 have asked the bankruptcy court for a change of venue, according to Pro-Form's filing with the Richmond court.

"They say that issue [on the land] should actually be decided in bankruptcy court," County Attorney Jim Cornwell noted.

Papers filed with the court arguing Pro-Form's position state that Carroll County, the plaintiff in the breach of contract lawsuit, is also the "fourth largest unsecured creditor" named in the bankruptcy petition.

The land in question is owned by Pro-Form and leased to AmerLink.

The issues raised in the lawsuit over the land also serve as the "key issue with respect to Carroll County's claim against AmerLink in the Chapter 11 case," attorneys for Pro-Form argued in its filing.

Pro-Form believes “the ability to use the real estate is critical to the success of any reorganizational plan that will be submitted by AmerLink."

Carroll County is already a party in the bankruptcy petition, Pro-Form's attorneys state.

"The only party not already involved in the Chapter 11 case in the bankruptcy court for the Eastern District of North Carolina is Pro-Form itself," says the company's court motion. "As such, it is in the interests of justice and for the convenience of the parties that this case be transferred to the bankruptcy court for the Eastern District of North Carolina."

County officials plan to object to Pro-Form's request and seek a hearing to argue the point, Cornwell said. They will point out this part of the suit names Pro-Form, an independent company that is not in bankruptcy.

"We think we're entitled to go ahead with the suit in the City of Richmond, because the property doesn't belong to AmerLink, it belongs to Pro-Form," Cornwell noted.

In the bankruptcy court, AmerLink has sought additional funds so it can start the process to get back up and running, the county attorney said.

The log home manufacturer is supposed to put together a plan detailing how it will reorganize and continue operating, but county officials have not seen that plan yet.

Deadlines in the bankruptcy case have been postponed on several occasions, Cornwell noted.

"We just have to follow along and see where it goes and see where the Richmond lawsuit goes against Pro-Form," he said.