July 17, 2003|By Athima Chansanchai | Athima Chansanchai,SUN STAFF
Charles J. Miller Inc., a 44-year-old Hampstead construction company that has paved more roads and parking lots than any other contractor in Carroll County, has filed for Chapter 11 bankruptcy reorganization after months of legal wrangling over the dissolution of the family-owned company.
The filing this week in U.S. Bankruptcy Court in Baltimore follows a flurry of litigation between majority stockholders Charles J. Miller Jr., president of the company, and his brother Donald Miller, and a bank's decision to foreclose on nearly $15 million in loans to the company.
"We're confident Chapter 11 will be successfully resolved," James A. Vidmar Jr., the attorney representing the company, said yesterday. "We need to get the creditors to come up with a plan of restructuring, which we'll take to the judge to approve."
He said major lenders, including Mercantile-Safe Deposit & Trust Co., and the company's top 20 creditors will form a committee to devise a strategy to lead the company back to financial health.
"This is a company that has been very successful for 44 years," Vidmar said. "This company does excellent work and always has made money until it hit this last year."
Founded in 1959, C.J. Miller does excavation and paving work, and installs storm drain pipes, utilities and sewer systems. The bankruptcy filing did not include a complete listing of assets and liabilities. But in records from civil suits involving the two brothers, Charles Miller said the company had been profitable for the past four years, and in 2002 had income of more than $1 million before taxes.
C.J. Miller and its affiliate, Miller Asphalt Products Inc., employ 340 workers and are working on at least 90 construction jobs. According to court records, Miller Asphalt, which had been profitable, showed a loss of $1.4 million before taxes last year.
"We don't anticipate any layoffs, hiccups on wages or benefits," Vidmar said.
The company's financial woes can be traced to a dispute between Charles Miller and his brother Donald, court records show.
The siblings and their families clashed over a decision by Donald Miller, who owned 49.9 percent of all shares, to seek a buyout from his brother, who owned 50.1 percent of shares, court records show.
Unsatisfied with his brother's estimate of the company's value, Donald Miller sued to dissolve the company, hoping to get a better price by putting his shares on the open market, records show.
Donald Miller alleged that his brother then made a series of maneuvers amounting to a "corporate squeeze out," court files show. Attempts at a settlement were unsuccessful, and a cascade of litigation involving the brothers began in December. Mercantile bank also declared nearly $15 million in loans to the brothers in default and filed suit against each of them seeking repayment, records show.
Unable to repay that debt and owing $10 million to other creditors, the company's board of directors filed a Chapter 11 petition for bankruptcy protection Monday.
The two brothers had signed loan agreements starting in April 1999 that allowed them to borrow millions to buy equipment and to pay for other operating costs at their company.
Court documents show a series of loans was approved varying from about $300,000 to $3 million over a four-year period.
On Tuesday, a Carroll County Circuit Court judgment was entered ordering Charles Miller to pay the bank $8.3 million with interest accruing at more than $1,000 a day.
His brother Donald was ordered to pay about $6.6 million with interest accruing at about $900 a day.
In Carroll County, C.J. Miller has paved miles of major roadways, such as Routes 32 and 27, along with county parking lots and subdivision streets.
Officials said that the company is working on four projects with the county, including repaving Ridge Road at Route 26 in Eldersburg.
"They'll honor those contracts," said Douglas Myers, director of public works, who added that over the 40 years C.J. Miller has been in business, it has done more paving work than any other contractor in the county. "They're very reputable and do good work."
Steven Powell, the county's chief of staff, said that Carroll is not worried about the company's ability to bounce back.
"We feel very confident that they're in Chapter 11, a reorganizational component, not down and out Chapter 7," Powell said. "We're confident in his ability to continue to do quality work."
