The former Marion, Ind., plant that Spara LLC acquired June 24 when it purchased TriEnda's assets has been shut down since late April in a dispute over unmet lease payments.
Meanwhile, thermoforming of TriEnda-brand pallets and components is ongoing at its former plant in Portage, Wis.
The Marion plant's landlord, Indiana hotelier Lester Lee, is suing TriEnda and its bank for about $2.1 million in damages and has taken over the site, leaving machinery idle, said Lee's attorney.
The lawsuit, filed June 13 by Lee's Marion T LLC holding company in Grant County Superior Court, alleges that Portage-based TriEnda failed to make required payments for March and April on 184,000 square feet of manufacturing space it leased in the Marion T industrial complex.
The 41/2-year lease, dated Dec. 1, 2008, requires a $38,000 monthly payment plus 21.7 percent of real estate taxes, special assessments and miscellaneous fees.
After the firm missed payments, Marion T notified TriEnda — in an April 12 letter sent by John Gray, a North Vernon, Ind.-based attorney for Lee — that it would terminate the lease and take possession of the property in 10 days.
“I don't know their business; I just know they didn't pay us,” Lee said July 26 by telephone.
Lee, whose holdings include Lees Inns' Midwestern hotel chain, referred questions to Marion attorney Joseph Certain, who represents Marion T in the suit.
After TriEnda failed to respond to the back-rent issue, Marion T took over the plant, idling an unknown number of employees, Certain said July 27 by phone.
Under a provision of the original lease, TriEnda granted Marion T a security interest in the plant's contents, but that was modified in December 2009 to give Fifth Third Bank collateral.
Certain said the lawsuit includes Cincinnati-based Fifth Third in order to get the bank to disclose whatever interest it has in the plant's equipment, supplies and office furniture. However, Fifth Third spokeswoman Debra DeCourcy would not comment on the pending litigation, saying it was against bank policy to do so.
Marion T seeks control of the property, cancellation of its lease with TriEnda, and $2.1 million it says it is owed for rent, maintenance fees and utilities under the remaining 27 months of the lease. It also wants to repossess the factory contents as security against the amount owed.
“If Marion T is paid, then I doubt that it would press a claim on the machinery,” Certain said.
TriEnda spent $20 million in 2008 to retrofit the Marion plant, which opened in January 2009. According to local officials, the factory never quite got off the ground, and had been manned by a skeleton crew in recent months.
Complicating the situation is the sudden sale of TriEnda's assets to Lexington, Ky.-based Spara, which incorporated the assets into its Spara Logistics LLC subsidiary.
After abruptly notifying the Wisconsin employees on June 23 that they would be laid off and have to reapply for their jobs, TriEnda President Curt Zamec — who became Spara Logistics' CEO — appeared to take a back seat to Kentucky-based management during the transition.
After buying the TriEnda business from Fifth Third in an Article 9 foreclosure sale, Spara rehired 101 of the 125 Wisconsin-based employees with full benefits. A spokesman at the time deferred questions about the Indiana workforce, saying Spara needed time to assess that facility.
Spara spokesman Pete Borum said July 27 that the company expects “everything will be resolved to the mutual satisfaction” of Spara Logistics and Marion T. “Spara Logistics LLC purchased the assets of TriEnda LLC in an effort to save the company from bankruptcy.
“Because we purchased the assets of TriEnda LLC and not TriEnda itself, we are not the target of any pending lawsuits, and are not able to comment on the subject,” Borum said via email.
Certain said Marion T and Spara have been in contact regarding the lawsuit, but no meetings were scheduled.
A hearing on the matter is set for Sept. 13 in Grant County Superior Court.
Amid the developments in Indiana, Spara Logistics' plant in Wisconsin is producing TriEnda-brand pallets, said Spara LLC spokeswoman Margaux DeMoss.
“We will continue to use the TriEnda name, as it's a valuable brand in our industry. Since we acquired the assets of TriEnda, we have started a successful new program. Another new program is expected to be in place by September,” she said.
She did not elaborate on the new products. Until the Marion plant's capacity is required, Spara will focus on the Portage site, she said.
Spara LLC consists of 14 companies divided into three groups: components; fabrication and assembly; and logistics. The company supplies molded, forged and cast metal and plastic parts for the global aerospace, energy, defense and transportation industries.
Spara Logistics specializes in the design and manufacture of heavy-gauge, reusable plastic pallets and shipping containers for the material-handling and packaging industries.