SHE Group LLC - which at one time operated dealerships in Oak Ridge and Lenoir City - was scheduled to meet with creditors on Monday, but the U.S. Bankruptcy Court hearing was interrupted after a fire alarm forced attendees to evacuate the Howard H. Baker Jr. U.S. Courthouse.
SHE Group LLC formerly did business as Dean Stallings Ford Lincoln Mercury in Oak Ridge and as Lane Chevrolet Buick Pontiac GMC in Lenoir City. SHE Group filed for Chapter 7 bankruptcy protection last month and is seeking liquidation of assets.
Monday's meeting was stopped after bankruptcy trustee Wayne Walls asked numerous questions of Randy Hinton, one of three people identified in the filing as members of the limited liability company.
Walls' questions focused largely on SHE Group's finances and borrowing. Hinton told the trustee that SHE Group was formed in December 2006 and that the firm's owners are himself, Kenny Lane and Tim Hutchison. Hutchison, a former Knox County sheriff, has said he sold his interest in the company in February 2008. Hinton, who has owned Knoxville businesses Cedar Bluff Towing and Chestnut Street Garage, was the only principal in SHE Group to testify during the creditors hearing. Lane, who has had interests in Knoxville-area auto dealerships, and Hutchison were not available for comment.
At Monday's hearing, Hinton said SHE Group borrowed $5 million from Citizens National Bank to purchase Dean Stallings Ford, although $500,000 of that money was used as operating capital. When Walls asked if that loan was unsecured, SHE Group attorney Lynn Tarpy said the bank thought the loan was secured, but "they didn't properly perfect" it.
Hinton said he didn't have a copy of the closing documents or settlement statement for that transaction and gave Walls permission to obtain those from another attorney.
Asked about a pair of loans from American Trust Bank of East Tennessee, Hinton said a $447,200 loan was secured by 33 acres of property on Cabbage Road in Halls. An attorney for American Trust, however, said both loans - which totaled more than $797,000 - were collateralized by the same property.
Hinton told Walls that originally they borrowed $750,000 from Citizens National Bank, but refinanced with American Trust. Hinton said he thought only he and Lane signed the American Trust loan, and that they were planning to develop the land in Halls. "We didn't ever do anything with it," he added.
Hinton said they didn't have an appraisal done for that property. Asked by Walls why Hutchison didn't sign on the American Trust loan, Hinton said he didn't remember and that he could be wrong about Hutchison not signing it.
"Mr. Hutchison didn't want to get into the development of it with us," Hinton said, adding that "we had a side agreement with him."
In response to a question from Walls, Hinton said he didn't think that agreement was written.
Hutchison has said he never participated in the day-to-day operations of Dean Stallings Ford, and Hinton on Monday agreed with that statement. Hinton declined further comment after the hearing.