Ohio-based The Armor Group Inc. is suing the court appointed receiver of Southwest Metal Finishing and Inventix Manufacturing, alleging he is improperly withholding a $1 million escrow payment.
Michael Polsky was appointed as Chapter 128 receiver in Waukesha County Circuit Court for Southwest Metal Finishing and Inventix Manufacturing, two related companies with operations in Menomonee Falls and New Berlin. Ultimately, he was able to find a buyer for the two companies in Nebraska-based Lincoln Industries, which planned to continue operations. Lincoln paid roughly $11 million for the companies’ assets.
Before the Lincoln Industries deal came together, Polsky had a deal in place with The Armor Group in February. The deal was initially for $21 million and The Armor Group put $1 million in an escrow account while it completed its due diligence. The company is suing Polsky in the U.S. District Court for Eastern Wiscosnin.
The Armor group determined on Feb. 20 it was not satisfied with its due diligence review, terminated the deal and sought to have its money returned.
On March 5, the two sides again reached a deal on the sale of the two companies, this time for $13 million. By March 15, The Armor Group again decided it was not satisfied with its review and terminated the deal.
The next day Polsky sent a letter to First Midwest Bank, where the funds were deposited, contending the grounds for terminating the deal were improper and The Armor Group should not receive a refund.
The bank, in turn, declined to the release the funds until the two sides provided joint written instructions.
What to do with the escrow money is still a matter of debate in the circuit court proceedings, but The Armor Group is arguing in federal court that the money was never the property of Southwest Metal or Inventix so the federal court can rule against Polsky.