Debt dispute hits shell of former downtown firm

Sterne Agee's Richmond office at  707 E. Main St. (Photo by Michael Schwartz.)

Sterne Agee’s Richmond office at 707 E. Main St. (Photo by Michael Schwartz.)

In a last ditch effort to collect on an unpaid loan, a local investment banker is trying to force the remnants of a longtime Richmond financial firm into bankruptcy.

An involuntary bankruptcy filing was made last week against Anderson & Strudwick Inc., a former downtown brokerage that was largely absorbed by an Alabama suitor more than two years ago.

The filing was made on May 15 by L. McCarthy Downs III, a former Anderson & Strudwick executive who is seeking to collect on more than $300,000 owed from a loan he made to the company four years ago. That loan, according to court and regulatory filings, was guaranteed at the time by five of the firm’s then-top brass: Milton Turner, William McCall, Lee Crenshaw, Don Newlin and Todd Newton.

Downs, who according to court records had been head of Anderson & Strudwick’s investment banking operations, won a court judgment stating that the debt is legitimately owed to him. And he has unsuccessfully tried several methods to collect the debt over the last few years. He filed attempts at garnishments against Anderson & Strudwick and Sterne Agee, the Alabama firm that acquired the company’s assets in late 2011.

Downs even took his fight for the money to arbitration through FINRA, the body that regulates investment brokers. The regulator ruled in his favor, agreeing that Turner, McCall, Crenshaw, Newlin and Newton had breached the guarantee on the debt.

Last week’s involuntary bankruptcy filing seeks to have the A&S entity – apparently leftover from the Sterne Agee deal – put into Chapter 7 bankruptcy. That process would look to determine the state of the entity’s assets and keep them in place to be used to potentially pay back the debt.

The bankruptcy filing pegs the value of the debt now at $361,000, which is made up of the principal balance plus interest and fees.

Downs could not be reached for comment on the case. Vernon Inge, a LeClairRyan attorney representing Downs, declined to comment on the case.

Sterne Agee said in an email Tuesday that it “had no involvement in the filing of the bankruptcy petition and doesn’t intend to become involved in the bankruptcy proceedings.”

The existence of the Anderson & Strudwick Inc. entity likely means it was kept as a separate shell that may have had lingering claims and liabilities at the time of the Sterne Agee deal.

Anderson & Strudwick Inc.’s address is still listed at its former headquarters at 707 E. Main St. downtown. Sterne Agee now operates out of the space.

In an involuntary bankruptcy case, the debtor has the opportunity to respond to the claim. Then a judge will decide whether the entity should be put into bankruptcy.


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