Watkins Nurseries and related businesses to get bankruptcy financing from a prominent family member – Richmond.com

Watkins Nurseries Inc., which filed for Chapter 11 bankruptcy protection last week, has reached out to a prominent family member for interim financing

Former state Sen. John C. Watkins, whose son is both the Chesterfield County-based companys president and majority shareholder, has agreed to lend the nursery and two related businesses Virginias Resources Recycled LLC and Watkins-Amelia LLC up to $200,000, bankruptcy court documents show.

U.S. Bankruptcy Judge Keith L. Phillips approved the post-petition financing, also known as debtor-in-possession financing, on an interim basis during a hearing Monday morning. A final hearing on the matter is scheduled for March 10.

John Watkins, a Republican who represented Powhatan and Chesterfield counties in the state Senate and House of Delegates for 34 years, is listed in bankruptcy court documents as a shareholder of Watkins Nurseries and a member of Watkins-Amelia limited liability corporation. He was president of Watkins Nurseries from 1998 to 2008.

He also is chairman of the board of Community Bankers Trust Corp., the Henrico County-based holding company for Essex Bank, which has 24 bank locations, including 18 in Virginia.

His son, Robert S. Watkins, is the fifth generation of his family to run the nursery business. The son holds the largest membership interest in Watkins-Amelia, which owns 331.4 acres in Amelia County that serve as the primary production area for the nursery. Robert Watkins also filed for personal bankruptcy last week.

Under the terms of the financing, the principal amount of the loan from John Watkins is not to exceed $200,000 with an interest rate of 6.25% annually. No payments will be due for the first six months following the judges approval.

The parties have agreed to the terms thereof, which the debtors [Watkins Nurseries and related businesses] believe are normal and customary (if not more favorable to the debtors than current market terms) for financing of this nature, according to the motion seeking approval for the financing.

The debtors contacted various sources about their liquidity issues and refinancing alternatives. Unfortunately, said discussions had not been completed before the debtors had to file these bankruptcy cases. However, in the course of the discussions, it was clear that no entity was willing to provide a short-term bridge loan, the court documents say.

As such, the debtors have concluded that no such prospective lenders were willing to provide unsecured or secured financing to the debtors in these bankruptcy cases under terms that were more favorable than the terms provided herein.

Filing for bankruptcy last Wednesday night was necessary to stop a foreclosure auction that was scheduled to be held Thursday morning to sell a total of 342.3 acres in Chesterfield, Powhatan and Amelia counties to pay off bank loans from Sonabank.

In 1997, Robert Watkins consolidated various individual and corporate loans with what was then Eastern Virginia Bankshares. (Southern National Bancorp of Virginia Inc. merged with Eastern Virginia Bankshares in 2017, and Sonabank is the name used for banking operations.)

The financing was needed, court records show. Unfortunately, recent years have resulted in certain financial hiccups for the debtors as they sought to continue providing their high quality services and products while also experiencing attrition and attempting to accommodate certain family members as they moved on to other endeavors outside of the nursery operations.

The two loans, court records show, were secured by real properties of the businesses and other assets, including substantially all assets of the nursery and Virginias Resources Recycled, a commercial and residential land-clearing, grinding, grubbing and logging business.

But while the businesses tried to address their financial obligations, Sonabank began collection efforts by seizing funds in an account of one of the guarantors, according to the documents.

The debtors have continued efforts to work with Sona and its counsel (which recently was replaced), but all such efforts have been rebuffed, the court documents show. In fact, Sonas response was the publication of foreclosure/auction notices for the properties owned by various debtors with no prior notice to the debtors or guarantors of the scheduled foreclosures/auctions. In addition, Sona has begun efforts to take possession of equipment vital to the debtors operations.

The Watkins Nurseries business as well as Virginias Resources Recycled and Watkins-Amelia each listed assets and liabilities of $1 million to $10 million. The personal bankruptcy filing for Robert Watkins listed assets and liabilities of $100,000 to $500,000.

Watkins Nurseries was founded by J.B. Watkins as a small fruit tree farm in Powhatan County in 1876. It has grown to have more than 500 acres across central Virginia used in the production of field-grown, landscape-size plants, according to the companys website.

Continue reading here:

Watkins Nurseries and related businesses to get bankruptcy financing from a prominent family member - Richmond.com