Stinger Bankruptcy Could Delay Economic Development

By Beacon Staff

An attorney for the Lincoln County Port Authority says the bankruptcy of Arizona-based Stinger Welding, Inc. could delay much-needed economic development in Libby. The company filed for bankruptcy in Arizona on March 8, a move that could hold creditors and lawsuits at bay for the time being.

The bankruptcy is the latest development in an ongoing saga that began in mid-December, when Stinger CEO Carl Douglas was killed in a plane crash near Libby. In January, the company entered voluntary receivership and on Feb. 11 the court-appointed receiver and manager, MCA Financial Group, announced that it would be closing the Libby plant.

As of January, the plant had employed nearly 70 people.

The Beacon made multiple attempts to contact Stinger Welding. Phone calls to the company’s headquarters in Coolidge, Ariz. were met with a message stating the phone had been temporarily disconnected. A call to the company’s Libby office was answered, but questions were directed to the court-appointed receiver. MCA Financial did not respond to numerous interview requests.

In the weeks that followed Douglas’ death, a legal dispute between Lincoln County and Stinger spilled into public view. In October of last year, the county port authority filed a lawsuit alleging Stinger failed to comply with a 2009 economic development agreement. The port authority also wants to determine who owns a multi-million dollar welding facility that Stinger built on the former Stimson Lumber Co. site in Libby with the financial help of the county.

On March 18, Stinger informed the Lincoln County Port Authority that it must halt its lawsuit because of the bankruptcy. But port authority attorney Allan Payne argues that since it was Stinger Welding, Inc. that filed the bankruptcy and not the company’s Montana entity, the lawsuit should move forward.

“As you can understand, there is a dispute as to if the stay (of commencement) actually applies to Stinger Montana,” Payne said.

The bankruptcy could have negative impacts for Lincoln County. Payne said the longer it takes to determine the ownership of the welding facility, the longer it will take to find a new tenant.

“Lincoln County’s unemployment is at 17.2 percent and there is a large facility tied up in litigation,” he said. “We need to continue with much needed economic development, but we’re caught up in Stinger’s death thrashes.”

According to County Commissioner Tony Berget, as of late March, Stinger was still operating a skeleton crew in Libby, but most of the employees had been laid off.

Berget said he hopes to see a new business move into the facility soon.

“Our key interest is getting employment back up in Lincoln County, getting jobs for people and helping folks out,” he said.

But resolving the building’s ownership could be a long ways off, as the bankruptcy case in Arizona becomes more complex. Just five days after Douglas’ widow and Stinger’s corporate secretary Stephanie Jordan filed for Chapter 11 bankruptcy protection, Fisher Sand & Gravel Co. and Steel Girder, LLC., business partners of Stinger, filed an emergency motion to dismiss the bankruptcy case. In documents provided to the Beacon by Payne, it states that the bankruptcy was an “unauthorized and bad faith filing by Stephanie Jordan.”

“This case will turn into a liquidation unless it is immediately dismissed. Over 125 employees will lose their jobs and millions of dollars in value will be lost,” the documents state. “Ms. Jordan has no real economic stake in the Debtor (Stinger Welding); she is only filing this surprise petition to cause the maximum amount of damage and disruption to gain leverage for herself, without any concern for the Debtor or the impending damages she will cause to all creditors.”

On March 13, the receiver MCA Financial Group joined the emergency motion to throw out the bankruptcy case. MCA, which had been managing the welding company until the ownership situation could be sorted out, states in court documents that it was given “absolutely no advance notice (or) warning,” about the filing.

Among the creditors that Fisher’s attorney says could be harmed in the bankruptcy case is Lincoln County and Montana. Court documents state Stinger Welding owes the county $76,192 in taxes. It also owes the state of Montana $219,080 and the IRS $875,922.

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