Justin Butler is an entrepreneur and an accountant with more than a decade of financial experience at the IRS, Bank of America, the former GE Capital and Target.
He just doesn’t have the deep pockets of Target Corp.
When Thor Construction failed in January, sued over nonpayment of a $3 million loan by its longtime lender, Sunrise Banks, Target also revealed that it spent $7 million to cover subcontractors who weren’t paid on store-construction projects by Thor, the general contractor.
Butler, 35, who hired Thor partly because he wanted to support a black-owned firm, was chagrined when three subcontractors filed liens for nonpayment of some of the $389,000 Butler paid to Thor for the construction, electrical and other work performed on Butler’s Duck Donuts shop in Woodbury.
“Where did the money go?” asked an incredulous Butler, who noted that Thor officials said last year they were a $300 million-plus firm, including Las Vegas and Minnesota.
Lenders and lawyers for several parties are wrestling over who is going to get what out of the remains of Thor, less than a year after Thor built a new Minneapolis headquarters.
“I’m not big like Target,” said Butler, a partner in a small retail holding company in a restaurant and a couple of Duck Donut shops.
“Thor worked on big projects like U.S. Bank Stadium, the Hennepin County Library and they put $1 million into the Super Bowl [sponsorship] last year. Something is wrong here. Thor was mismanaged. What happened to my funds?”
Butler isn’t alone in asking that question.
Richard Copeland, 63, Thor’s founder who started in the industry 40 years ago as a concrete subcontractor, has blamed Thor’s failure on faulty software and related cost overruns on a $36 million north Minneapolis building and parking ramp that Thor finished last fall. Thor said it was investing $12 million in its headquarters space in the building and related parking spaces. Thor’s partner on the building, Hennepin County, invested an initial $22 million for space in the building and parking spaces that would serve its affiliated NorthPoint Health clinic nearby as part of an expansion of the overcrowded facility.
Butler doesn’t believe construction overruns at the Thor headquarters could take down such a large, experienced operator.
This month, a Hennepin County judge ruled Copeland is liable for $3 million Thor owes to Sunrise Banks. Copeland and Sunrise have agreed to settle the suit for $1.5 million, but the court has yet to sign off on the terms, according to court documents and lawyers for Copeland and Sunrise.
Copeland, who has shut down Thor Construction, still faces claims from a surety bond writer, Old National Bank and subcontractors.
Moreover, it’s not clear who is responsible for the $12 million that former Thor Cos. CEO Ravi Norman said last year that Thor was investing in the north Minneapolis headquarters for its space and parking stalls.
That package was assembled by the Twin Cities office of the Local Initiatives Support Corp. (LISC) and included unspecified participation by U.S. Bank and Anchor Bank, the predecessor to Old National.
Twin Cities LISC said the matter is being worked by bankers and lawyers.
In a telephone interview, Norman, CEO of Thor Cos. until he quit abruptly in January, said Copeland was 100% owner-operator of Thor Construction. Norman said he focused on nonconstruction businesses such as development, design and an energy subsidiary.
Norman, a former banker who ran Thor for a decade, has formed a new partnership that has acquired some Thor assets. He said he also plans to make an offer, apparently to bankers who hold the mortgage, to buy Thor’s interest in the building. That will be interesting.
Meanwhile, Hennepin County Administrator David Hough, who once led the civil division of the Hennepin County Attorney’s Office, said Hennepin and the banks did due diligence on Thor that indicated it was stable. He declined to specify the documents or the process.
Hough said the county has increased its investment to $26 million in the Thor building at Penn and Plymouth avenues. Hennepin’s holdings include one floor, mostly for NorthPoint and other county services, and what has grown to 400 parking spots.
The county has budgeted up to $35 million to expand NorthPoint, which is diagonally opposite from the Thor building. The project is what could be a $100 million private-public reclamation of the corner of once-blighted Plymouth and Penn avenues, including the new Estes Funeral Home.
All of this is no consolation to Butler and other creditors who can expect to collect little from the remains of Thor.
Butler wants an investigation to determine what happened to millions he and his banker say disappeared inside Thor.
Butler has settled and removed two liens against his Woodbury business. The largest, for more than $60,000 by a mechanical contractor, is still at issue. He also has to pay his own bank debt and rent on the Duck Donuts shop.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at firstname.lastname@example.org.