A.G. Dillard, Inc.

Information for Creditors of A.G. Dillard, Inc.

Case Number 22-60115 in the United States Bankruptcy Court for the Western District of Virginia


A.G. DILLARD’S STORIED BUSINESS HISTORY

A.G. Dillard, Inc. was established by its founder, Alan Dillard Jr. in 1966. In the 50+ years since, the company has expanded from offering driveway paving services to becoming an established excavating contractor offering total site development in the entire central Virginia region. According to documents filed in the bankruptcy case, the company brought in more than $26 million in income in 2019 and more than $27 million in 2020.

A.G. Dillard summarizes its services in papers filed in the bankruptcy proceeding: “The Debtor provides a wide variety of site construction services from start to finish that allow a developer to eliminate working with multiple contractors for site preparation.” A.G. Dillard prides itself as being a comprehensive excavating contractor.

In the bankruptcy case, A.G. Dillard has indicated that it intends to hire bankruptcy lawyers – Hirschler Fleischer PC, additional lawyers known as “special counsel” for an undisclosed purpose – Michie Hamlet Lowry Rasmussen & Tweel PLLC, a financial advisor – RJ Reuter LLC, and an accountant – Shelton & Company CPAs, P.C. The company hopes to reorganize and emerge from bankruptcy profitably, so that it may continue operating for years to come.

RISING SUPPLY COSTS LED TO BANKRUPTCY

Despite its substantial gross income in 2020, rising costs outperformed A.G. Dillard, leading to the company experiencing a net loss for the year. The nature of the Debtor’s business leads it to enter into fixed contracts months or sometimes years in advance of when they must be performed. A.G. Dillard entered into many such contracts before the COVID-19 pandemic using prices that prevailed at that time.

However, as we are all too familiar, the pandemic caused the prices of many materials and services to skyrocket. With the project costs locked in due to the pre-pandemic contracts signed by A.G. Dillard, the Debtor was forced to lose money on several jobs. A.G. Dillard’s costs exceeded its estimates by nearly $10 million.

Due to the radical price increases, the Debtor lost money in 2020, which led it to trouble with its primary lender, Blue Ridge Bank. To add to its troubles, the Debtor is still working on some contracts with outdating pricing. A.G. Dillard wants to continue operations, so it filed for bankruptcy protection to restructure some of its onerous contracts and work out an extended loan with the bank.

WHAT CAN CREDITORS DO?

While A.G. Dillard has explained that it owes Blue Ridge Bank at least $5,000,000, there are not many details on the amount of the company’s unsecured debt. The little information that has been provided indicates that the Debtor owes several creditors upwards of $100,000 each. Additionally, A.G. Dillard has designated many of its unsecured creditors as “disputed,” which indicates that it may take measures aimed at reducing or eliminating the debts, leaving creditors unpaid.

Unsecured creditors must be proactive in situations where a debtor designates them as disputed. If a creditor is listed as disputed and takes no action, it is at risk of not being paid what it is rightfully owed in the bankruptcy case. Asserting a claim is easy and can lead to a big change in outcome for a creditor in a bankruptcy case.

Additionally, unsecured creditors may be able to work together to raise the potential of repayment for all creditors. An official unsecured creditors’ committee is sometimes formed in cases such as A.G. Dillard’s, and the committee can hire lawyers to be paid for by A.G. Dillard. A committee can be an effective advocate for repayment of unsecured creditors who can’t always afford to vigorously assert their own rights. If you have any questions about this case or committees in general, please feel free to reach out to PRLT.

PRLT does not represent A.G. Dillard, Inc. The content on this page is provided for informational purposes only. Nothing on this page or this website creates an attorney/client relationship between you and PRLT. Nothing on this page is legal advice. If you have any questions about the A.G. Dillard bankruptcy case or anything discussed on this page, please contact us.

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