Despite financial trouble, Thor founder says his business will live on
By Kenzie O'Keefe Editor and Cirien Saadeh Staff Reporter
In January, news broke that Thor Companies, Minnesota’s largest minority-owned company, which opened its Regional Acceleration Center (RAC) on Penn and Plymouth in Sept. 2018, is undergoing potentially ruinous financial challenges.
Thor’s lender, Sunrise Banks, has sued for $3 million in unpaid loans and debts and has requested a receiver take control of the company, according to Hennepin County Court documents. Several attempts to reach Sunrise Banks were unsuccessful.
Thor has countersued. In late January, Copeland told Black Enterprise that his company has had a credit line with the bank for 11 years and has steadily reduced their line of credit; he also said that just under half the contested $3 million is “not legitimate.”
In late February, Copeland told North News that Thor had hired a chief reorganization officer (Manchester Companies Inc.) and is hopeful a settlement can be reached. “There are a bunch of entities that are playing a part in how this restructuring takes place and looks,” he said. “We believe [and] are confident that it’s all going to come together.”
Copeland says Thor’s business model will change significantly moving forward; they will liquidate much of their equipment and “become more of a construction manager than a general contractor.” That change is “essential to our reorganization strategy,” said Copeland.
Thor’s fate has the potential to impact the economic future of North Minneapolis. The RAC is both Thor’s headquarters and home to several other businesses; it has been championed as a beacon of hope for the economically embattled Northside.
THE FUTURE OF THE RAC
Costing $36 million to complete, the RAC dwarfs the other institutions on the bustling Penn and Plymouth corner. Building tenants include Me and I Fitness, the African American Heritage Museum, and Build Wealth Minnesota. A second Sammy’s Avenue Eatery location is anticipated to open sometime this year (it’s been delayed due to construction requirements), and both Target Corp. and the Metropolitan Economic Development Association (MEDA) lease large spaces in the building.
Hennepin County owns the building’s entire fifth floor and 420 of its 625 parking spaces, property it paid over $20 million for as part of its NorthPoint Health and Wellness expansion plans. “We felt like it was a real win for the county and Thor,” said David Hough, Hennepin County Administrator, in early February.
Hough says the county was optimistic about the largest minority-owned construction company in the state being on the Penn and Plymouth corner and that they are “sorry” Thor is struggling. He does not anticipate Thor’s financial issues affecting the county’s piece of the building. “The building will be maintained,” said Huff, “The asset is taken care of. The main issue...is how [Thor is] going to address the leins on their portion of the property.”
NorthPoint CEO Stella Whitney West says Tri Construction is finishing the fifth floor build out and NorthPoint employees will move into the RAC in March, a month before they break ground on their campus expansion on the Northwest corner of the intersection. “We saw it as a win-win and still see it as a win-win,” she said.
Me & I Fitness owner, Jeffrey Scott, says that Thor employees leaving the company has negatively impacted his business; he has lost 6-12 gym members, who used to work in the building. “I’d be lying to say it doesn’t hurt. Obviously, when you’re a small business, every dollar and every member, every client counts,” he said.
Both Scott and Sammy McDowell, owner of Avenue Eatery say there has been little communication from Thor about what their financial trouble means for their building tenants.
"There hasn't been any communication from Thor or any of the building owners," said Scott. "I believe they're providing information on a need-to-know basis and at this point there is nothing I need to know that I don't already know."
McDowell says that whether or not Thor continues to be his landlord he will continue to track towards opening his coffee shop inside. “We’re not going anywhere,” he said.
PENN AND PLYMOUTH DEVELOPMENT
WILL CONTINUE WITHOUT A HITCH
Anchor organization leaders on the Penn and Plymouth Ave. corner say they’re not worried about Thor’s situation negatively impacting the corner’s economic success.
Tracy Wesley, Estes Funeral Home director, described Thor’s situation as “an anomaly” and likely a “management issue.” He says his business, along with those in the RAC seem to be thriving. “there’s been such a positive reaction to our new business. ...“Whatever is going on with THOR, it’s specific to them. It’s not so much a factor of where they’re located as it’s what’s going on their their business.”
Hough says he and other county leaders are optimistic about the future of the corner, which they’ve invested $68 million in. They’re particularly excited about the NorthPoint expansion groundbreaking, set to happen in April. “This is a huge deal. It still is a huge deal,” he said.
“Our hope is that [Thor] will be able to ride the storm. They have done excellent work on this building. This is an asset for this community,” said Whitney West.
THOR'S FINANCIAL CHALLENGES
Thor’s partnership with Sunrise Banks began in Oct. 2009 when Franklin National Bank of Minneapolis, which preceded Sunrise Banks, lent $3 million to Thor. Thor was meant to pay back the loan plus 2% interest (totaling $3,725,000) by April 2018. In April 2018, Thor took out an extension on the loan and agreed to pay back the loan, with interest, by Dec. 31, 2018. According to court documents, Thor failed to make the payment and on Jan. 8, 2019; Sunrise Banks demanded the loan and interest be repaid immediately. The lawsuit summons states that Sunrise Banks believed that Thor was in default and they requested that the Court put the collateral of Thor into the hands of Sunrise Banks.
The summons reads, “Upon information and belief, Borrower [Sunrise Banks] is insolvent or in imminent danger of insolvency. Borrower is unable to meet its liabilities in the usual course of its business and has insufficient assets to cover its liabilities." These liabilities include payroll and other debts.
Community members have worried that the company would not be able to move past the financial challenges, while others have wondered about what the financial challenges meant for the future of the project and project partners.
“We’re very saddened that it's occurring and I hope that Richard Copeland and Thor weather this and move forward and continue as a business,” said Hough.
Thor Companies and Sunrise Banks are currently locked in counter-lawsuits. Sunrise’s lawsuit is asking the case judge, Susan Robiners who was appointed to Hennepin County Court in 2006 and re-elected twice, to require Thor to pay back compensatory damages, the requested $3 million, plus interest. Sunrise Banks has also requested that Thor be placed under a court-ordered receivership, which is situation in which an organization is placed under the responsibility of another, particularly when the originating company has financial difficulties, as Thor has had.
Because of the company’s financial challenges, Thor has lost much of its staff, including former CEO Ravi Norman, who is now the CEO of Norman Global Enterprises.
As of late February, requests for a “motion hearing” have been cancelled for Feb. 28 and March 22. A motion is a request for a ruling. What that means for the future of the lawsuits is yet unknown. Hennepin County Court documents from early February discuss the Feb. 28 hearing, which was meant to discus, at least in part, the request for a receivership by Sunrise Banks.
Still despite the organization’s challenges, Northside community leaders still have their hopes for answers—what happened and where do we go from here—and for a bright future for the company.
“There are always ups and downs in business. When [Copeland and Thor] are ready to tell their story, the community will embrace them just like any other member of our family. We don’t throw people out of our family. We’ll say ‘you can do this. You can do it again,' that’s what we need to be about,” said Whitney West.
“The story isn’t finalized yet,” said Copeland.
Correction: Thor Companies has not filed a lawsuit against sunrise Banks. In Jan. 2019, in Star Tribune and other media reports, Richard Copeland had announced that Thor Companies would be responding to Sunrise Banks’ lawsuit and that Thor Companies believed they had “claims” against Sunrise Banks. As of the end of Feb. 2019, however, Thor Companies was not locked in a countersuit against Sunrise Banks.