Contractor being sued for alleged fraud will liquidate
A bankrupt construction company plans to close up shop and liquidate its assets as its owner faces ongoing lawsuits a cross three states that accuse it of defrauding investors.
JBS Pipeline Contractors, in Commerce City, was founded in 1993 and family- owned by James and Kathy Parent u ntil r ecent years, according to its website. It handles underground installation work for large corporations, along with local cities and counties, the website states.
In 2021, JBS was sold to Iron Ox Development. That sale is the source of its legal woes.
Iron Ox, o f Virginia, told investors in the spring of 2021 that it h ad r aised $ 90 million from lenders and investors to buy JBS from the Parents, who were looking to r etire, a ccording t o lawsuits that Businessden obtained from courts in California, Utah and Arizona.
JBS had revenue of $ 18.4 million in 2020 and was on track to earn $ 23 million in 2021, investors w ere told. A $ 100,000 i nvestment w ould n et r eturns o f $ 263,000 over 10 years and give investors a stake in J BS worth $ 362,000, according to the three lawsuits.
The three men who are suing Iron Ox invested $ 400,000, $ 120,000 a nd $ 80,000, respectively.
They now believe they were lied to and are accusing Iron Ox of securities fraud.
In March 2022, the JBS investors learned the company “was nearly insolvent,” they wrote in their lawsuits last year. Revenues were lower and equipment costs higher than they had been led to believe, they say, and much of JBS’ leadership team had departed.
During t his time, Iron O x’s president was taking a $ 295,000 salary from JBS, the investors allege.
Then c ame allegations of shoddy work. Xcel s ued JBS in late 2022, accusing it of damaging underground lines while digging in Fort Lupton; that case was settled out of court.
The next year, the Grant Water & Sanitation District in Jefferson County sued JBS, accusing it of botching a $ 440,000 job and creating a sinkhole. A five- day trial is scheduled for June.
Through its attorneys, Iron Ox has denied misleading investors and has asked that the investor lawsuits be dismissed. It also denies doing shoddy work for Grant Water and is c ountersuing the district for terminating JBS and allegedly not paying the contractor what it is owed.
Meanwhile, o n April 4, J BS filed for Chapter 7 bankruptcy. If approved by a bankruptcy judge, Chapter 7 will require JBS to dissolve and liquidate its assets t o pay off debts.
JBS had gross revenue of $ 22 million in 2022 and $ 21 million in 2023 but only $ 1.5 million in the first three months of this year, according to its bankruptcy paperwork.
It has nearly $ 16 million in assets, including $ 8 million in accounts receivable and inventory, along with $ 6 million in machinery, though “most ( of that) property has been left at job sites,” JBS says.
The company lists $ 13 million in debt. Its largest creditor is Adams Bank, which is o wed $ 4.1 million that i t loaned JBS soon after Iron Ox bought it in 2021. Other creditors include Capital One ($ 674,000), the Internal Revenue Service ($ 660,000) and about 300 vendors, s uppliers, subcontractors, truckers, consultants, lawyers and insurance companies.
JBS and its bankruptcy l awyer, A aron G arber with W adsworth Garber Warner Conrardy in Littleton, did not respond to several requests t o discuss the bankruptcy.