A Reno bankruptcy judge cleared the way on Thursday for the owner of a Minden building abandoned by Darja Laboratories to prepare for new tenants.
The company, which filed for Chapter 11 bankruptcy on Dec. 17, a day before an eviction notice was to take effect on the Airport Business Park property, promised it would vacate most of the 86,000-square-foot building by 5 p.m. Thursday.
More than $2.3 million worth of equipment used in the manufacture of skin-care products will remain at the property until creditors are able to find a buyer.
Building owner Al Shankle claims Darja defaulted on $443,717 (with penalties) in back rent before the eviction was sought. "In addition to that, they owe me $133,539.29 I advanced to them," he said. "They promised (to repay) that, but it never happened."
After the bankruptcy hearing, Incline Village resident Darlene McCord, who owns the company with husband James, said Darja plans a reorganization as part of the bankruptcy filing.
"We're going to maintain all of the research and everything," she said at the time. "It's just one portion we're trying to separate."
McCord's attorney, Alan Smith, has not yet submitted a debt management plan for Darja.
Since vacating the manufacturing arm in Minden, McCord said Thursday the company has continued operating at a Zephyr Cove location.
"There's three of us left; me, my husband and a twin sister," McCord said. "We will go back to what we've done all of our lives, that is to contract the work out."
In the weeks following the Chapter 11 filing, none of the former employees' jobs has been reinstated and at least several of the employees are still owed back pay. McCord said arrangements for retrieval of the owed money are being made, and that the financial snafu cannot be pinned on mismanagement.
"Sure we owed money," she said. "You don't go looking for financing if you don't need money."
She said potential pending litigation prevents her from providing details of the company's finances.
Several of Darja's 15 employees said during the last part of 2001 they saw the company shrink from a promising up-and-comer in the manufacture of skin care products to a debt-riddled shell of a company. In November, just weeks before the bankruptcy filing, Darja received a governor's award for growing Nevada businesses.
"People were let go and people took pay cuts" with the promise the company was turning around, one employee said on condition of anonymity. "Five people were fired near the end of the year."
Employees said the R Group, a Cleveland-based venture capital company, had come in earlier in the year with cash and the intention of revitalizing Darja, but left when McCord proved unwilling to relinquish control. The R Group could not be reached for comment Thursday.
McCord provides a differing account.
Without citing the R Group by name, McCord said the weeks before the Chapter 11 filing, payroll, along with all of the other accounting, was out of her or her husband's hands.
"It was completely out of our control," she said. "All of the accounting was handled by a company out of state and the employees were aware of that."
In addition to the payroll deficiencies, some employees incurred medical bills during a period when they were still paying into the company's insurance program, but the insurance company said Darja's account was no longer active. One employee claims to owe $27,000 because of the situation. Additionally, "cafeteria" accounts -- employee spending accounts into which they had been paying -- were reportedly empty.
Shankle, who owns Al Shankle Construction, said he lent the company money for capital improvements with the expectation that Darja was being nursed back to financial health.
"They were a great company that was willing to do the job and fix (Darja) to put it on the right track," Shankle said, of the Cleveland investor. "Not only myself, but all of the employees were hopeful of that."
"I'm at a disadvantage because I have to go to court with people," and cannot talk about finances, she said. "I owned the stock and they controlled the finances."
During Thursday's hearing, Smith said Shankle had interrupted removal of equipment from Darja's building by removing air from truck tires and padlocking doors. Shankle has said that equipment was supposed to remain under court order. Smith contends that the McCords were within their legal rights to remove the equipment in question.
A creditors hearing is set for Darja on Jan. 28.