CHARLESTON — A man who was ordered in October to pay $1.36 million in a case in West Virginia's Business Court Division filed for Chapter 7 bankruptcy.
David P. Pray, who founded Pray Construction and now operates a construction consulting company called PrayWorks, filed for bankruptcy Feb. 15. According to the suggestion for bankruptcy filed in the Business Court Division, the bankruptcy stays the case against Pray in the business court.
Mark Staun, an attorney with Hartley Law Group representing Vandalia Capital in its case against Pray, said 12 individuals got together and personally guaranteed a loan for about $30 million back in 2006.
Staun
"They personally guaranteed it for development in Charlotte, North Carolina," Staun said in an interview with The West Virginia Record. "A company called IB Development was going to build a housing development and IB didn't have the money, so these guys backed the loan."
Staun said each one of the 12 members of Vandalia guaranteed 8.3 percent of the $30 million.
"Vandalia didn't guarantee anything, but the 12 members personally guaranteed the $30 million with United Bank," Staun said. "Right after that started, the market collapsed in 2007 and the project never got off the ground."
Staun said as a result, interest payments on the loan became due and all of the members started making semi-annual interest payments to keep the loan from going into default.
"Time went on and David Pray decided he was not going to pay any more of his semi-annual interest payments," Staun said. "I filed a lawsuit in 2013 to get the money, and the case was sent to the business court, where the case was then settled."
Staun said with the settlement agreement, Pray agreed to pay the approximately $800,000 to get current and he agreed to be an equal member of Vandalia going forward.
In May, Staun filed to reinstate the case because Pray wouldn't pay.
The motion for reinstatement lays out the ways Vandalia had worked to figure out how to allay United Bank's concerns about the loan. Vandalia first attempted for the members to transfer letters of credit to an entity in North Carolina that agreed to develop the property and sell the lots. The effort failed because the loan purchase could not be consummated as required by the bank before the end of August 2017.
The second effort was to move the members' letters of credit to another unrelated bank. This was also unsuccessful because neither of the banks named in the case would issue substitute letters of credit in tight scheduling window United Bank had mandated, according to the motion for reinstatement.
Pray let his letter of credit expire and claimed he could not get another one, according to the motion.
"Additionally, Mr. Pray has not contributed any capital, pledged any collateral, nor made any payments towards outstanding property taxes, interest payments, or any of the outstanding indebtedness to Premier Bank for the development moneys borrowed by some of the Vandalia members...nor made any proposal to do so," the motion states.
In October, Business Court Division Judge James H. Young Jr. ruled that Pray owed the money, but the question was when he would owe the money, whether that was as a capital call or if he owed it later, according to the October order.
In January, Vandalia filed a motion for summary judgment.
"There is no fact for a jury to determine, as under the West Virginia Code, Vandalia had the right to 'do all things necessary or convenient to carry on its business or affairs ... '" the motion states. "Vandalia had the right to '[m]ake payments .... or do any other act, not inconsistent with law that furthers the business of the limited liability company.'"
The settlement agreement granted Vandalia that right as a matter of law and mandated that it do so as Vandalia properly resolved was necessary for its business, according to the motion.
"While it may be Mr. Pray's opinion that the capital call was 'unnecessary', that opinion does not create a question of fact as Vandalia's right to make a capital call is confirmed by the Settlement Agreement and inures as a matter of law under relevant provisions of the West Virginia Code regarding limited liability companies," the motion states. "Finally, there is no issue of fact to be tried relating to the procedures utilized for Notice under the Operating Agreement. All procedures were appropriate and, importantly, were never objected to at any time by Mr. Pray."
Staun said the day of a pretrial hearing for the case, Pray filed for bankruptcy.
"It's clear he is not bankrupt," Staun said. "He is worth millions of dollars. He filed bankruptcy to avoid payment."
Pray's monthly income is $13,926.15, according to the bankruptcy documents filed in the U.S. Bankruptcy Court for the Northern District of West Virginia.
The documents show that he has transferred ownership of his properties to his company, PrayWorks; his wife, Laura Pray; and his son and daughter-in-law, Joshua and Judith Pray within the last two years.