Jedd to seek confirmation on April 11

Property development company Jedd LLC is set to seek confirmation next month of a liquidation plan after failing to recover from the 2008 economic downturn.

Judge Keith M. Lundin of the U.S. Bankruptcy Court for the Middle District of Tennessee in Cookeville on March 4 approved the debtor's disclosure statement for its plan. He set an April 11 confirmation hearing.

Jedd would fund the plan by surrendering collateral to each of four secured creditors by foreclosure or transfer. The primary holders of Jedd's secured debt are Progressive Savings Bank (owed $7.78 million), Clayton Bank and Trust ($3.13 million), Union Bank ($627,000) and Peoples Bank and Trust Co. ($136,000).

Within 18 months of the effective date of the plan, the secured creditors would have the choice to either foreclose on the property on which they held liens or to receive the deeds for the property.

Under the plan, each of the guarantors of the Progressive debt (Ed and Gayle Wiley, Gerald and Yvonne Grent, Kenneth and Lynn BuShea, Paul and Patricia Gates and the estate of Denver and Nancy Smith) would execute an unsecured new promissory note of $353,750 in favor of Progressive Savings. The notes would be priced at 4% and mature in 15 years.

Jedd would issue similar notes to Union Bank in the amount of $32,750 and to Clayton Bank for $163,500.

After the liquidation, Jedd would be dissolved.

According to the disclosure statement for the plan, filed on Oct. 18, Jedd was founded in 2003 after Paul Gates and Kenneth BuShea took their wives on a trip to Fentress County, Tenn., where they met Gerald Grent and Ed Wiley.

The company planned to develop property in the South Fork National River and Recreation area of Fentress County. It owns approximately 3,494.37 acres of real estate along with a corporate office and a 3,400-square-foot model home on the land. Court papers did not detail the planned development.

In late 2008, Jedd entered into a partnership with SW Real Income Fund LLC, a company based in Nashville, to gain capital. SW Real Income Fund contributed about $1 million to Jedd from October 2008 through July 2009.

Court papers suggested, however, that a larger investment fell through at the same time.

"Following the collapse of the stock market in October 2008, the principals of Jedd and SW Real quickly recognized that the economy was in unprecedented turmoil, sales were not expected under any conditions, and SW Real would have difficulty delivering the promised capital to Jedd," the company said in the disclosure statement.

In 2011, Jedd then planned to use the timber and mineral resources on its properties to generate income while it prepared to liquidate some of its real estate and sought a $400,000 loan from Union Bank.

That plan collapsed as well.

"By 2012, however, the economy had not recovered sufficiently for Jedd to sell any of its property," debtor counsel D. Hiatt Collins of Gullett, Sanford, Robinson & Martin PLLC said in the statement. "Consequently, Jedd was no longer able to sustain its loans and began to default on its obligations."

The Fentress, Tenn., company ultimately filed for Chapter 11 protection on June 20, 2012. In court papers, Jedd listed $13.38 million in assets and $10.68 million in liabilities.

Jedd estimated its real estate has a value of $12.28 million and the timber on its properties has a $1 million value. The other assets of the debtor total about $98,212.

The company has $10.85 million in secured claims. Priority unsecured claims, which mostly reflect property taxes, total $68.73 million, and general unsecured claims, including claims owed to insiders, total $2.94 million.

As of June 20, Jedd's three largest unsecured creditors were Glenn Clark Enterprises (owed $41,600), Tallent Lumber (owed $29,294) and Total Bank of America - Visa (owed $24,316).

Collins did not return calls for comment. Thomas H. Forrester of GSRM is also debtor counsel.