The Daily Reporter – WI Construction News & Bids Wisconsin's Construction Authority
Castlerock Commercial Construction Inc. has shut down and now faces a lawsuit to collect loans worth more than $3 million.
It immediately wasn’t known when Milwaukee-based Castlerock closed, but, according to a lawsuit filed Tuesday, the contractor defaulted in February on loans to keep the business afloat.
According to the complaint filed in Milwaukee County Circuit Court by the attorney for Rex Runzheimer, owner of Runzheimer International Ltd., a Waterford-based commercial management company, Castlerock defaulted on a series of personal loans totaling $2.89 million.
Runzheimer would not comment on the case or why he lent the money to Castlerock.
Runzheimer’s attorney Andrew Oettinger, of Godfrey & Kahn SC, Milwaukee, said his client gave Castlerock and its executives several loans and had no reason to doubt he would receive repayment.
“I don’t think we would have filed the lawsuit, if we thought it was uncollectable,” Oettinger said. “Beyond that, I cannot comment on my client’s understanding or belief at the time the transactions took place, other than he did obtain asset information about the entity and financial statements from the guarantors.”
The lawsuit names Castlerock as well as President Richard Jinkins and former Executive Vice President James Worthington as guarantors of the loans.
According to the complaint, Runzheimer lent Castlerock $1.09 million from November 2008 to May 2009 to help the contractor “obtain bonding and negotiate directly with private clients.”
After the initial loans, a business operated by Runzheimer’s company hired Castlerock to expand the Horny Goat Brewery in Milwaukee, according to the complaint. After completion of the job, Jinkins and Worthington asked for another loan to continue operations, according to the complaint.
Oettinger said the terms of an additional $1.45 million loan required Jinkins and Worthington put up collateral in the event that Castlerock closed.
According to the complaint, Jinkins and Worthington claimed total collateral of about $2.94 million, $1.04 million of which was the listed net assets of Castlerock.
Runzheimer, according to the complaint, gave Castlerock the additional loan in March 2010.
But, according to the complaint, Castlerock continued in “dire financial straits,” and Jinkins and Worthington requested additional money from Runzheimer.
In November 2010, after obtaining more collateral, Runzheimer consolidated the first two loans and gave Castlerock, Jinkins and Worthington an additional $350,000 for a total loan of $2.89 million, according to the complaint.
Part of the loan, Oettinger said, included an agreement that gave Runzheimer security interest in all equipment, fixtures, inventory and other property owned by Castlerock.
According to the complaint, on or about Feb. 16, Jinkins and Castlerock acknowledged the agreement was in default and voluntarily agreed to pay $127,331 in partial collateral reimbursement.
Runzheimer is seeking $3,292,900 in addition to attorneys’ fees, collection costs and interest.
Neither Jinkins nor Worthington could immediately be reached for comment Wednesday.
The company’s website is not operational and a call to Castlerock’s primary number resulted in an automated message stating: “It is with great sadness and regret that we inform you that Castlerock has closed for business. Despite all efforts to maintain our operations, we cannot overcome the devastating effects of our nation’s economy and effects that it has had on our customers and vendors.”
