LAKE COUNTY — A Lakeport nursery owner felt like he was set up after Piedmont Lumber paid off its debt to him in May to buy more plants but then sent him a letter in late July saying the company wouldn”t pay back any of its vendors.
Invoices show Piedmont still owes Spring Thyme Nursery $2,172.40 for herbs and perennials.
Tom McCarrick, owner of Spring Thyme Nursery, said Piedmont management promised him the store would remain open.
“They had bad intentions,” McCarrick said.
Piedmont Lumber”s retail store and lumberyard closed July 26, leaving dozens of employees out of work and some vendors without a major buyer. The company closed or sold all of its stores except the Piedmont Rock Yard, Carlos Elizondo, Piedmont”s financial adviser, said.
Mendo Mill is in the process of buying the Piedmont Lumber Lakeport store, has already rehired about six management and office employees and has told workers it plans to re-open under the new name this month, owner Mike Mayfield said.
Piedmont sent letters dated July 26 with the greeting “Dear Valued Vendor” to a number of suppliers, signed by the owner, Bill Myer. The letter describes some of Piedmont”s financial problems.
“It is with great regret and sorrow that I am informing you, a valued vendor partner, that all of the proceeds from the sale of Piedmont”s assets are expected to be paid to the company”s lender, which has a senior secured interest in all of Piedmont”s accounts receivable, inventory, machinery and equipment and real property,” Myer said in the letter. “Legally, the bank”s secured claims have priority over unsecured claims, such as vendors and service providers.”
Elizondo said Piedmont”s priorities were to first pay off its bank debt, to keep as many workers employed as possible and to pay suppliers. The company started working in March to set up the sale of the stores, equipment and inventory.
“The natural order of doing business as a vendor is one of risks,” Elizondo said.
Piedmont tried to make a number of deals, including one that would have sold the company with its inventory, equipment and vendor debts in order to pay off all the bills, Elizondo said. Eventually, the bank took control of the sale.
“The company tried to figure out ways of achieving goals that take care of all the folks,” Elizondo said.
Company-wide, Piedmont owes hundreds of vendors millions of dollars, with some debts to Lake County companies, Elizondo said.
McCarrick said he stopped selling to Piedmont in October because of its debt to him.
“I asked them to pay it and they didn”t in June,” McCarrick said. “They pretty much just ignored me. In July, I received the letter.”
He has dealt with businesses before that couldn”t pay and the owners eventually “made it right,” McCarrick said.
“It makes me mad,” he said, adding that his nursery will survive but he won”t make a profit.
Another invoice dated July 19 shows Piedmont Lumber owes Dock Factory & Supply Company in Lakeport $2,233.94. A Piedmont Lumber invoice shows the parent dock company, Paul Racine Distributor Ltd., owes Piedmont $405.32. The remaining balance for Piedmont would be $1,828.62.
Piedmont merchandise manager Ted Mandrones said he thought the company paid off the local vendors, including Spring Thyme Nursery and Paul Racine Distributor Ltd.
Paul Racine, president of both Paul Racine Distributor Ltd. and the dock company, said it”s been obvious for a while that he wouldn”t be paid for dock floatation supplies.
Racine said it was “not nice” getting a letter saying the company won”t be paid five months after Piedmont ordered the item, sold it and made a profit off of it.
“That”s just plain rude business practices,” Racine said.
He had supplied Piedmont for more than 20 years.
He said he knew what to do when the recession hit to remain successful, Racine cut staff and pay to employees and himself.
“I”m sure they”re under a lot of pressure, but that doesn”t mean you forgo treating people humanely,” Racine said.
Contact Katy Sweeny at kdsweeny@gmail.com or call her directly at 263-5636, ext. 37.
