Woodtex files for bankruptcy
By John Christensen and Anita Wadhwani
HIMROD — A company that began and grew here in Yates County nearly 40 years ago, has now declared full bankruptcy in the U.S. Bankruptcy Court in Tennessee. Woodtex, the manufacturer of sheds, outbuildings, barns, and cabins that was begun in the early 1980s by Sanford & Barbara Lapp, was inherited and greatly expanded by their sons, Kent and Benjamin Lapp. Kent Lapp is the Chief Manager of Woodtex and is the signer of the bankruptcy papers.
Riverwood Cabins, part of the Lapp’s expansion in Tennessee, had been rumored to be in trouble for some months, but local employees and retail partners were assured that Woodtex as the parent company, was in no danger. That appears to have been false. A source inside Woodtex reported the company had filed for Chapter 7 bankruptcy Friday, and the voluntary petition was filed Monday, March 2 in the U.S. Bankruptcy Court for the Middle District of Tennessee. Those papers list all the assets of Woodtex in multiple states and here in New York for liquidation.
Woodtex’s assets are valued at $1,107,053.98, while the liabilities owed exceed that at $1,186,655.59. Of that debt, $612,673.38 is owed to Franklin Synergy Bank in secured loans made in Franklin, Tenn. With established collateral, the bank is likely to be first in line to reclaim Lapp’s debt to them. The remaining $573,982.21 is owed to 105 unsecured creditors, many of them customers who paid deposits on buildings never delivered, or supply companies for materials never paid for.
The list of creditors includes local private, business, and non-profit customers.
A source within Woodtex confirmed that operations in Himrod ceased last week and the employees were terminated. One local Woodtex retailer who would not be named reported that a tractor trailer showed up at his location long after dark last week and loaded up the models he had on display for sale. The driver had no paperwork and told him he was sent by the bank to get all the buildings they could for the liquidation.
“They pulled the rug out from under all of us,” the retailer said. He, too, was told that only Riverwood was to close, and had recently accepted deposits from customers for Woodtex buildings. “That makes me look like the bad guy. They stuck it to everybody. They owe me money, too,” he says.
Eight months ago, Elixa and John Beaumont placed a $56,000 deposit on a custom-built cabin for Elixa’s aging parents that would be installed next to their own Franklin, Tenn. home.
They spent $15,000 on a septic system, hired a crew to build the foundation and felt a sense of relief that they would finally live just steps away from the elderly couple.
Then came the first piece of bad news.
In early January, a salesman for Riverwood Cabins told the Beaumonts the cabin delivery would be delayed until August. To guarantee delivery, he demanded an additional $10,000 installment payment by Jan. 11. The couple sent the money.
One month later, Riverwood Cabins filed for bankruptcy.
“How could they take your money if the company was heading into bankruptcy?” Elixa Beaumont said. “I’ve been crying for days. My parents are 88 and 90 years old, and I don’t know how to tell them. My heart is broken.”
The Beaumonts are among scores of customers who have lost tens — or even hundreds — of thousands of dollars on prefabricated cabin homes from Riverwood Cabins, whose company slogan says “We build cabins so you can build memories.” The modular homes are constructed in the company’s Lebanon warehouse then trucked in for final construction on customers’ properties.
Franklin Police confirmed in late February they were investigating Riverwood Cabins. Lt. Charles Warner, a police spokesman, declined to release details of the investigation, saying “because this is an active, developing case, we are unable to provide you with additional information at this time.”
“Naturally, I regret this very much, not only because I have lost my entire investment in Riverwood, but also because I, and my parents before me, have been dedicated to this line of work for nearly 40 years,” Kent Lapp, Riverwood’s CEO, said in a statement sent by his attorney.
“I know this will cause financial loss for Riverwood’s many fine customers and vendors, and loss of jobs for our many valued employees,” the statement said.
Lapp said he resumed the role of CEO in late 2019 after the departure of some executives and while the company was “experiencing a severe shortage of working capital.”
“I caused a substantial amount of fresh capital (much of which was derived from my personal assets) to be infused into Riverwood, but this proved inadequate to meet the need.”
‘One excuse after another’
At least 60 customers from around the country are named as creditors in the company’s bankruptcy filings, including Janice and Andy Prior.
The couple saved for years to buy a small parcel of land in the Adirondacks in upstate New York for their retirement. They contracted with Riverwood in October 2018 to build a cabin, making a required $49,880 down payment. The cabin was expected to be completed in July or August 2019.
In October 2019, Janice Prior said she received an urgent message from a sales representative asking her to immediately visit the bank to make a second installment payment of $34,915 before the end of the day. Prior said she did.
When the funds had not arrived by 1 p.m. the next day, Prior got another urgent message asking her to check in with the bank to make sure the funds were delivered.
The company promised to begin construction of the homes within three days of the second installment, but Prior said no one responded to her calls or emails about the status of construction after she sent money.
“In hindsight, this money was clearly not for the start of our cabin,” she said. “To date, it has not even been started. We continually emailed and called and got one excuse after another.”
Amy Braun and her husband took out a loan to purchase a cabin from Riverwood in January 2019, making the required 50% deposit of $114,350.
They had seen a pop-up ad on Facebook for the company, which builds modular cabins that are partially fabricated, delivered to a property and then fully constructed.
The cabin never came.
By November, the couple had sold their home and were living in a trailer on land they purchased in North Carolina. It was so cold, Braun said, the couple left to stay temporarily in her sister’s vacation condominium in Destin, Fla.
The couple, both retirees in their 60s, now have no life savings and no home, but are making payments on their loan for the cabin.
“Something went terribly wrong with this company,” Braun said. “Why did they keep taking deposits from people when they couldn’t deliver?”
Janee Gordon and her fiance, Ira Richardson, did get their cabin. The Memphis couple took out a $279,000 bank loan to purchase a five-bedroom, four-bath log cabin to serve as a family vacation home on property Richardson owns in Marvell, Ark.
A truck driver deposited the four modules of the home on the side of the road near Richardson’s family property in early January.
Gordon said she frantically called Riverwood to get the home transported down a driveway to the home’s new location and then assembled. The company promised it would send a crew to take care of it, Gordon said.
Instead, Gordon got word the company was filing for bankruptcy.
The couple has spent $9,500 for a moving company to transport the home to their property. To construct the home will cost an additional $12,000 for a crane and $20,000 for labor, Gordon said.
“That’s an extra $42,000 to pay for something we’ve already paid for,” Gordon said. “We both work every day. It’s been financed. We’ve maxed out our credit cards, and my fiancé is pulling money from his 401(k).”
Gordon has filed a complaint with the Tennessee attorney general.
The cabin remains unfinished. Under stormy Arkansas skies, the couple’s dream vacation home sits in pieces, covered in a tarp and leaking inside.
Reach John Christensen at email@example.com or 315-536-4422.
Reach Anita Wadhwani at firstname.lastname@example.org or 615-259-8092 and on Twitter @AnitaWadhwani.