A lawsuit filed in Pike Circuit Court claims that that the first occupant in Pikeville’s Kentucky Enterprise Industrial Park has not paid back more than $4 million in loans to a local bank.
However, a company official told Appalachian Newspapers last week that, despite challenges, the company still has a future.
SilverLiner, a locally-based company, announced in 2017 that it would locate in the KEIP, starting up in a spec building which was the first structure located there. Since that time, the company has inhabited the building and fitted the building to accommodate its business of tank manufacturing and up-fitting for vehicles such as gasoline and water tanker trucks.
However, the lawsuit, filed May 5, claims that SilverLiner, through its CEO Chris Tomlinson, took out a series of loans from a local bank but has failed to meet the repayment terms.
According to the lawsuit, beginning in March 2018, Citizens Bank of Paintsville loaned Silverliner a total of nearly $4.25 million through a series of loans, for which the company placed the spec building purchased from the City of Pikeville, among other property, up as collateral.
The loans, court records show, were used to finance the fitting of the spec building, as well as the equipment and other costs going into the establishment of the building.
As a result of the failure to repay the loans as the agreement provides, the lawsuit asks for, among other relief, that the building and other SilverLiner property be placed up for sale by the Pike County Master Commissioner’s Office.
Tomlinson told Apppalachian Newspapers on May 14 in a statement that the company has faced challenges, but that it is still in operation and taking orders. Tomlinson said the company has not seen the lawsuit yet.
“We have had trouble with tank supply since we began production in 2018,” Tomlinson said. “Our tank supplier has been in breach of contract since the beginning to the point we have been forced to get an ASME U stamp and build our own tanks. After finally getting a U stamp and beginning tank production, we secured contracts for a large portion of our production. Then the COVD-19 pandemic hit and shut down our customers those contracts were with.
“We have been behind on our interest payments to CNB,” Tomlinson said. “However, about a month ago, they returned our payment, took the money in our checking account and refused further payment or to negotiate any new terms.”
Tomlinson said the company secured two new tank customers this week, while a third customer will be back online in July.
“We are filling a need in the market and there are orders to be had,” he said. “We feel strongly that there is a future for SilverLiner. It is our number one goal to help rebuild our community, which is especially important with more coal-related jobs lost daily.”
Pikeville officials indicated this week there are questions about the status of the company, which had promised to initially hire approximately 50 people with starting salaries of $50,000.
In a statement issued this week, the City of Pikeville expressed disappointment in the news of the lawsuit.
“The City of Pikeville is disappointed that SilverLiner’s financial situation resulted in the loss of jobs for members of our community and potential closure of the business,” the statement said. “Just like the residents of Pikeville, our industrial park is resilient and will continue to move forward. We will not let this setback sway us from our goal of making the Kentucky Enterprise Industrial Park a beacon of hope for our region. We are committed to creating a prosperous future for Pikeville and its workforce.”
Pikeville City Attorney Rusty Davis said the city has the right of what happens with the property should SilverLiner vacate the premises, but he said the city has not received the required notification that would trigger the city acting on that.
“What we gave ourselves is right of first refusal to purchase the property back if they have to shut down,” he said. “They’ve never given us the required notice of a shutdown. I’m not sure they’ve shut down. The last I heard, they were still buying tankers and fitting them on trucks. I don’t think anything’s keyed in yet that would key us exercising our right to repurchase.”
The company paid the city $1 million for the property, so, in the case of SilverLiner’s closure, Davis said, the city would pay the $1 million back. However, in addition, in order to purchase the building back, the city would also have to pay the $2.7 million part of the loan which went into finishing the building.
The ultimate plan of the city, regardless of SilverLiner’s status, Davis said, is to have a tenant in the building.
“Our whole goal is to make sure somebody’s up there working,” Davis said. “We don’t care if it’s SilverLiner. If it’s somebody up there working that can make occupational taxes, that’s fine.”
Pikeville is currently in progress of building a second, 60,000-square-foot spec building at the industrial park. The new building is under construction.