PORTAGE, WIS. (Nov. 16, 1:40 p.m. ET) — Boston Finance Group has tossed out five officers of Wisconsin thermoformer TriEnda LLC — and placed CEO Curtis Zamec on a leave of absence — claiming that Spara LLC has stopped paying back a loan that Spara used to buy TriEnda in mid-2011.
The thermoformer, now called TriEnda/ Lexington Logistics LLC, continues in operation with about 150 employees, according to Jonathan Golden, general counsel of Boston Finance and now secretary of the thermoforming plant in Portage, Wis.
“Our intent is for the continued stability and growth of the company, and if that requires additional capital, we'll be able to assist with that,” Golden said in a telephone interview. A one-page document titled “Important Notice of Management Change,” given to employees in meetings with Boston Finance, said: “Our intention is to keep the company open and operate without any interruption.”
Boston Finance is based in Clearwater, Fla.
TriEnda/Lexington Logistics is still owned by Spara, a Lexington, Ky.-based manufacturing group. But Boston Finance took over Nov. 7, meeting with employees for three days. Golden said Boston Finance officials are contacting TriEnda customers and vendors.
According to the notice of management change, these officers have been removed: George Hofmeister, Hank Harvey, Jan Ackley, James O'Toole and Dan Smith. Zamec was placed on a leave of absence.
The new corporate officers, all from Boston Finance, are Leo Govoni, chairman; John Fernando, president; Anthony Janicki, vice president; Golden, secretary; and Howard Harris, treasurer and chief financial officer.
Spara declined to answer emailed questions about the situation. Zamec could not be reached for comment.
Golden said none of the former officers was involved in the daily management in Portage. TriEnda operations are being run by a core group of about two-dozen people, working as a team, he said.
The notice asks TriEnda employees to cooperate with the new corporate officers, saying the change will have no impact on their daily work. “The new officers of the company very much want the company to be a profitable self-sustaining business.”
And the notice gives a pointed warning: “Do not contact any of the officers who have been relieved of their position or Curtis Zamec. Report any conversations you have with Curtis Zamec or the other officers to John Fernando immediately. Failure to do so will be grounds for termination.”
For longtime employees of TriEnda, the sudden officer change is the latest chapter in an ongoing saga. The first big blow came in the mid-1990s, when the U.S. Postal Service delayed a huge order for hundreds of thousands of thermoformed plastic pallets, prompting a big layoff.
In 2007, Zamec bought TriEnda from Wilbert Inc. Zamec has been sued by investment firms owned by machinery dealer Donald Kruschke and his late brother, Neil Kruschke Jr., who invested in TriEnda. The Kruschkes claim Zamec secretly transferred half of his ownership into a trust of his wife, who was seriously ill. Zamec has claimed in court documents that the loss of the largest customer caused TriEnda's financial problems.
The Kruschke case was set for a jury trial in Cuyahoga County Common Pleas Court to begin Nov. 5, but the trial was canceled. A pretrial conference is set for Jan. 14.
The involvement of Boston Finance Group came after that turmoil with the Kruschkes. Spara bought TriEnda in a foreclosure sale in June 2011. Boston Finance loaned money for the deal. Golden would not say the amount of the loan, but in April, Boston Finance got a judgment in Circuit Court for the County of Grand Traverse, Mich., declaring that Spara must repay $6.7 million, the amount due on the loan, plus interest and late fees.
Spara had agreed to repay the loan, at 20 percent interest.
As collateral for the loan, Spara “pledged to Boston all (100 percent) of Spara's membership in Spara Logistics LLC,” Boston Finance said in the Michigan lawsuit. Spara soon began failing to make payments on the loan, according to court documents.
“Spara has continued to refuse to pay Boston,” Golden said. “Boston elected to exercise its lender remedies by exercising its voting rights.”
“So we voted out the old managers,” Golden said. Boston notified the former officers on the day before visiting the plant. “We didn't take this action lightly,” he said.
“The action, we never would have taken, if Spara had just paid its loan, if Spara had paid any amount, or worked out any sort of payment plan with us.”
When Spara bought TriEnda, all employees got laid off and had to reapply for their jobs, with a 10 percent pay cut. Zamec, who was then president of TriEnda, notified workers in a letter.
Boston Finance officials have reassured employees that won't happen now. “Nobody will have to ‘reapply' for their job and wages and salaries will remain unchanged,” Boston said in the notice of management change.
Golden said they assured employees “that this is not then, and we have no intention of doing that.” Boston Finance wants a “seamless transition,” he said.
Golden said TriEnda employees are dedicated to making the company successful. “We were very profoundly humbled by the commitment of some of these employees and the management people,” he said. “What a great group of people.”