Plainville businessman Chuck Comeau, in the midst of foreclosure proceedings against his companies, will likely keep his Plainville design firm open and his and his wife’s personal accounts from being frozen. 

In a hearing Thursday in Ellis County District Court, attorneys for Bank of Hays and creditor FSSW, a Hays company under the Robert E. Schmidt estate, argued their motions for restraining orders against The Rien Corp. LLC and Therien LLC, two companies under the DFC Holdings umbrella owned by Chuck Comeau.

The requests are part of a foreclosure filed by Bank of Hays last year that includes 18 properties in downtown Hays and property in Plainville for missed payments on two loans totaling more than $8 million.

The lenders essentially seek court orders that would provide accounting and protection of the inventories of the two DFC companies and any proceeds from the sale of the inventories.

The bank and FSSW will revise their motions to reflect the agreement worked out during a recess of the proceedings Thursday. It will likely be next week when the motions are in effect after being refiled and signed by Ellis County District Court Judge Glenn Braun.

The agreement also includes a two-week stay on those orders that will allow DFC to plan a liquidation sale of the inventory that will best benefit all parties.

Braun also recommended the parties seek a receiver to oversee further action in the case to offer expertise and greater availability in the proceedings.

Tyler E. Heffron, an attorney with Triplett Woolf Garretson, Wichita, said FSSW has a superior claim to Bank of Hays on the assets. Bank of Hays, represented in the hearing by Creath L. Pollak, is not contesting that claim. She appeared via the phone due to having the flu.

According to the motions filed in court, in 2013, FSSW loaned $1 million to the two companies to purchase the assets of Therien & Co., a San Francisco-based furniture design and antique furniture restoration company. The court filings say FSSW has never received payment on the principal of the loan and has not received required interest or royalty payments in more than a year.

DFC has admitted it is in default on the loan.

Responding to the filings in court Thursday, DFC attorney Ashley Comeau said if the court granted the orders as requested, it could lead to an immediate shutdown of Dessin/Fournir, the luxury furniture and textile manufacturer in Plainville, and put 40 people out of work.

“If we take all these proceeds for FSSW, we have nothing left to pay our staff to continue to do what they request in their motion,” Comeau said.

Comeau is the daughter-in-law of Chuck and Shirley Comeau.

Attorneys for Golden Belt Bank and Wilson State Bank and Comeau objected to language in Bank of Hays’ motion requesting all bank accounts owned by DFC companies and Chuck and Shirley Comeau be frozen and funds from other institutions transferred to Bank of Hays. The motion also requested any new bank accounts could not be opened without Bank of Hays’ consent.

Attorneys for Golden Belt and Wilson State banks interpreted that request to include personal bank accounts and the mortgage on the Comeaus’ home. Freezing those accounts would mean the Comeaus could not make their house payment, or even buy groceries, Ashley Comeau said.

The attorneys’ agreement will exclude the Comeaus’ personal accounts.

Much of the hearing centered on FSSW’s concerns on the security of the Therien inventory and any proceeds from sales. While much of the inventory —about 78 percent, Comeau said — is in Los Angeles, it is also scattered across the country, including San Francisco, New York and Chicago.

While furniture is not manufactured in Plainville, pieces are sometimes sent to Plainville for repair, Comeau said.

Heffron said an L.A. private investigator hired to inspect a warehouse there reported earlier this week the inventory appeared to be in disarray and some items appeared to be damaged from water leaks in the building.

However, Comeau said the company can account for the locations of inventory items, and some items might appear to have damage from being on showroom floors.

Comeau also expressed concern the sale of proceeds would not be conducted in the best interests of all the parties. DFC controls over $10 million in inventory that could have a net value of over $30 million, but any sale needs to be planned and well-marketed, she said.

For example, she said, the L.A. warehouse contains millions of dollars of fabric, but at a liquidation sale it would have no value because designers don’t purchase fabric in bulk.

“Our fear is that millions would go in the trash,” she said.

Under the plan formed by the attorneys Thursday, the two-week stay on the orders would allow DFC and the other parties to form a plan for such a sale. They will also establish how the “to be billed items” — custom furniture orders — will be accounted for in the inventory.

The order will also allow FSSW to establish and control a “lockbox” bank account for any proceeds from inventory sales. DFC will also provide updates on the inventory on a monthly basis.

Braun admitted he did not have a great deal of experience in cases such as this and also told the parties his calendar for the year is already quite full. He said it would likely be August before further hearings in the case could be placed on his calendar, and that’s not even considering trying to coordinate with the nine attorneys who were present at Thursday’s hearing. He also had concerns that differing interpretations of court orders could result in delays in resolving the case.

For those reasons, he suggested a receiver be appointed. Under Kansas statute, however, one of the parties involved would have to file that request with the court.