A Los Angeles-based window and door manufacturer has purchased the assets of Architectural Traditions in Tucson, which left a number of its customers in the lurch after abruptly shutting down in April.
Customers who had put down deposits on custom windows and doors were told they would get reimbursed only if there was money left over after the company paid off its secured debts — to the bank and to its landlord.
But it looks like those clients will now be able to recoup at least some of their losses, says the company’s court-appointed receiver.
When Architectural Traditions shut down, its secured creditor, Western Alliance Bank, sued to try to recoup its loan. In May, the Pima County Superior Court appointed a third-party receiver to oversee the liquidation of the company’s assets.
SIX-FIGURE LOSSES
Los Angeles-based Arcadia Inc. submitted the highest bid — $2 million — to purchase those assets, and the Pima County Superior Court approved the purchase June 30.
The company’s bid exceeded the amount owed to secured creditors, and the surplus will be divided up among the unsecured creditors, each of whom will get at least some of their money back, says the receiver, Jeremiah Foster of Resolute Commercial Services in Scottsdale.
The lawsuit between the creditor and debtor was unusually cooperative, he said.
“The outcome is not usually like this in which there’s a surplus given out to other unsecured creditors,” Foster said. “Getting something back rather than nothing is an atypical outcome.”
Still, some customers told the Star in April their losses were in the six-figure range. Foster said he can’t provide a total for what is owed to unsecured creditors, or how much they each might get back, as he is still compiling and validating claims.
Merle McPheeters, a retired teacher in Tucson, lost $335 from a deposit he put down on door hardware. He says while he’s relieved he’ll get some back, he’s doubtful it will be much. The company’s decision to keep customers’ payments for uncompleted work and use it to pay debts was wrong, he said.
“I think they sucker-punched everybody on this,” he said. “There was no clue they were in dire straits.”
Arcadia Inc., which manufactures commercial aluminum and steel windows and doors, will reopen Architectural Traditions’ facility at 9280 E. Old Vail Road. The acquisition marks Arcadia’s expansion into the residential market and the launch of a new division called Arcadia Custom.
PREFERENCE FOR STEEL
In an April email to the Star, former Architectural Traditions President Tom Liittschwager said the company closed because of the declining market for custom homes. Liitschawager was unavailable for comment, said his public-relations consultant, Linda Cohen.
Employees say the housing market was not the whole story. While the overall custom home market was depressed, a bigger factor in the company’s downfall was the shift in customer demand from rustic, wood products — Architectural Traditions’ specialty — to more modern steel windows and doors, said Greg LeFevre, national sales manager for Arcadia Custom. He was previously sales manager for Architectural Traditions. He was one of about 60 former employees whom Arcadia has rehired at the Tucson facility, out of 120 employees who lost their jobs there.
Architectural Traditions expanded into steel products without the engineering resources or production know-how, LeFevre says.
DELAYS SNOWBALLED
While Architectural Traditions was getting plenty of orders for steel products, processing them took months longer than expected, he said. Unable to bill customers for those unfinished and delayed orders, the company struggled to meet its large overhead costs. Wood product sales continued to decline, and the lack of revenue led to its collapse, LeFevre said.
“It kind of snowballed,” he said. “What was going to propel the company forward was that steel product line, and we were just unsuccessful in producing that product.”
Arcadia has the equipment and engineering expertise in steel production, so the Tucson facility will produce steel, aluminum and wood products, he said.
LeFevre says he is optimistic that the company’s local division will eventually grow to exceed 120 employees. “It was really an unfortunate chain of events. A lot of people were affected by it,” he said. “In the end, I think it was the best outcome that could have happened, based on the circumstances.”