New Market MetalCraft faces involuntary bankruptcy filing

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By Sally Voth -- svoth@nvdaily.com

NEW MARKET -- A town business is the subject of an involuntary bankruptcy petition filed in U.S. District Court in Harrisonburg by a Maryland church.

First Baptist Church of Glenarden filed the Chapter 7 (liquidation) petition against New Market MetalCraft Inc., of 9633 S. Congress St., on July 8, according to online court records.

The Prince Georges County church started work on a new 200,000-square-foot facility in 2000, and hired New Market MetalCraft to build metal catwalks for it, according to a declaration for a motion to appoint an interim Chapter 7 trustee for the company from church Deacon William Gentry.

The church had wanted the metal crafters to also do glass and bronze railings, and with the catwalks it would've paid about $1.3 million, it says.

However, the church requires bonds for all work costing more than $1 million, and the company wouldn't or couldn't provide a bond, the filing says.

Instead, the railings and the catwalks were divided into two separate projects, and the church started making progress payments to New Market MetalCraft, the declaration says.

"After NMMC began fabricating and erecting the catwalk, the Church noted that the work did not conform to the contract documents and became concerned with excessive delays by NMMC," it says.

The church told the company to fix the work, but it didn't, according to the filing. After NMMC refused to correct the work, the church "default terminated," the business in April 2006, the filing says.

In U.S. District Court in Maryland last summer, Judge Alexander Williams Jr. confirmed an arbitration award of $130,518 to the church.

In a memorandum opinion, he took NMMC attorney Michael J. Melkersen to task.

The opinion says that during a telephone hearing on July 28, Melkersen again raised an objection based on statute of limitations, as well as other issues that weren't in the record.

"For example, Defendant alleged that the Arbitration Award was procured by fraud, that the Arbitrator was biased in favor of Plaintiff, and that the Arbitrator exceeded the scope of his authority/jurisdiction," it says.

"Defendant also attempted to reargue issues concerning the merits of the original dispute between the parties. These new self-serving and bald allegations have no evidentiary support in the record and thus will not be considered."

Gentry's declaration also says that during mediation, NMMC said it had shut down and had no assets to pay the judgment. It says that, in fact, the company had cash and equipment, including vehicles and shop and office equipment, as well as an interest in lease improvements and account receivables.

The declaration also accuses the company of liquidating its assets through sales and auctions right after the arbitrator ruled against it. Some of the assets apparently have been sold to Ole Melkersen, a principal of the company, it says.

"Upon information and belief, Ole Melkersen has not paid cash to NMMC for the assets he purchased," the declaration says. "Instead, Ole Melkersen has 'forgiven' certain debts he claimed were owed by NMMC to him and his wife."

Ole Melkersen's wife, Gail, is the company's other principal, it says.

According to the declaration, the Melkersens have listed the commercial property -- attached to and part of their home -- for sale for $750,000.

"The Church has grave concerns about NMMC's honesty and integrity, not to mention its financial wherewithal and its management," it says. "The Church believes the Melkersens are ultimately selling all of NMMC's assets to benefit themselves and to the detriment of their creditors."

The metal craft company hasn't yet filed a response. One is due by Aug. 2, according to court records.