FAYETTEVILLE -- First Security Bank has settled its lawsuit against clothing company Lauren James Enterprises Inc., which was founded in Fayetteville, and its buyer LJ Apparel, after those involved entered into a confidential settlement and release agreement, according to court filings.
Last week, the suit was dismissed with prejudice with each entity agreeing to cover its own costs and attorneys' fees. An action that's dismissed with prejudice can't be brought back before the court again.
Over the course of a lawsuit that began in June, Searcy-based First Security Bank contended that Lauren James Enterprises Inc., and its owners Lauren and Lance Stokes, defaulted on a loan agreement and then moved the company's inventory and accounts to New Jersey, in conflict with the terms of the contract.
According to court documents, the bank said New Jersey-based LJ Apparel's later purchase of the company was a sham foreclosure -- a move to "extinguish First Security's lien on the inventory so Lauren James could continue to operate as a new entity, LJ Apparel."
First Security Bank initially loaned Lauren James Enterprises Inc. $500,000 and was still owed $338,720, according to documents. The bank valued Lauren James' inventory, which it contended was collateral for the loan, at $1.3 million.
In August counterclaims, both Lauren James Inc. and LJ Apparel argued the foreclosure sale was valid and therefore extinguished First Security's interest in the inventory of the company. They said Legacy National Bank had first priority in Lauren James assets and that Legacy's interest transferred to LJ Apparel when it purchased the promissory notes valued at $800,000 from the bank.
Conway-based attorney Gary Jiles, who represented First Security Bank, declined to comment Monday on the settlement. Messages left with Fayetteville attorney Suzanne Clark, who represented Lauren James Enterprises as well as its owners, and William Conner Eldridge Jr., the Fayetteville attorney who represented LJ Apparel, were not returned by late afternoon Monday.
Founded in early 2013 by Lauren Stokes, Lauren James Enterprises is a women's clothing brand available through retailers around the United States, including Dillard's Inc.
Business on 02/12/2019
Print Headline: Arkansas clothier, bank settle foreclosure sale suit