Phoenix, AZ – 9 April 2021 – Only four months after their official launch, the executive staff of ART Asset Adjusters, LLC, have filed a motion in the Arizona Superior Court of Maricopa County pleading a complaint for the appointment of a Receiver. Allegations by the Plaintiffs include one that at least one of the “Legacy Owners” had created conflict and disruption in the effort to leverage ART’s owners against each other in the effort to; “wait for the Company to fail so he can purchase assets for pennies on the dollar.”
The Plaintiffs go on to assert that “Because of the ongoing internal strife and lack of trust among ART’s owners, ART is unlikely to survive without intervention.”
The Plaintiffs in the complaint are listed as; Douglas Camping, Kevin Camping, F. Daniel Johnson, and D&K Entities, LLC (“Plaintiffs”), in their Verified Complaint against Defendant ART Lender Services. They allege that this action for the appointment of a receiver for ART is necessary to protect and preserve the property and rights of Plaintiffs in connection with the dissolution, winding up, and liquidation of ART.
The Plaintiffs allege that ART has been experiencing significant cashflow problems and does not have enough working capital to continue operating much longer and that over the past several weeks, there has been substantial divide and opposition among ART’s owners and members over the direction of the Company.
The complaint goes on to allege that all parties have agreed that the Company should be dissolved, but ART’s board is at an impasse regarding the terms of the dissolution, winding up, and liquidation of ART.
It is also alleged that the Plaintiffs themselves are some of ART’s largest creditors, and serve as guarantors on ART’s debt obligations. As such, they claim that the best way to protect their interests is to place ART in the hands of a receiver.
The Plaintiffs allege to have advanced $1.6M in start-up money with the understanding that these funds would be reimbursed buy the company when ART raised more capital and that none of ART’s other owners advanced any operational expenses or to or after the 4th quarter of 2020.
ART had planned on raising another $5,000,000 in capital in December 2020 or January 2021 to fund additional transition and assimilation costs, and cover the operating expenses in the 1st quarter of 2021 until the normal accounts receivable flow was built up to cover operational cash flow. However, a likely potential investor for ART backed away due to the changing political and financial climate that negatively affected their personal financial position.
ART officially launched its business on January 4, 2021.
Shortly after ART launched, other potential investors delayed their consideration of investing due to the uncertainty based on potential Covid-19 related stimulus and moratoriums. These delays caused significant cash flow delays for the Company. Each Legacy Owner was permitted to keep all 2020 receivables and not contribute or roll such receivables into the Company, which, when combined with the failed third round capital raise, left the Company in a poor cash position. The Company allegedly faced assimilation challenges, technology issues and cash shortfalls during the first few weeks of operations, causing stress among the owners.
In the ensuing months, the Plaintiffs allege to have taken out personal promissory notes in excess of $2M to keep the company operating. Promissory notes that allegedly, none of the “Legacy Owners” had participated in the guarantee of, but benefitted from in the coverage of operating expenses, including but not limited to payroll expenses.
The Plaintiffs have requested that the Court-appointed receiver in this action determine the respective rights and obligations of ART’s owners and members. Wherefore, the Plaintiffs respectfully request that the Court enter an Order appointing a receiver over ART, to protect and preserve the property that is the subject of this action and the rights of Plaintiff in said property and direct the receiver to provide a historical and ongoing accounting of ART’s business and financial operations and determine the respective rights and obligations of ART’s owners and members.
On April 13th, a hearing for Order to Show Cause will be held before Judge Danielle Viola
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