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Storytelling Center challenges USDA’s building appraisal

The International Storytelling Center will return to federal bankruptcy court in Greeneville on Sept. 22.
The ISC has petitioned for a contested valuation hearing, challenging the USDA Rural Development’s appraisal on the Storytelling Center building located in Jonesborough’s historic district.
ISC President and Founder Jimmy Neil Smith told the Herald & Tribune that two appraisals on the building are nearly $600,000 apart.
“We received an appraisal of $728,000 from Michael Greene, an appraiser in Johnson City this spring. About the same time of year, Rural Development did their own appraisal and came up with a value of $1.32 million. We felt that because of the discrepancy — they’re so far apart — we would ask the court to make a determination on the exact value of the building,” Smith said. “We don’t believe, given this economy and given the limited use of the building, that it is worth more than $728,000. Those are two factors that would most certainly lower the value.”
The court’s decision will be crucial, he said, to the ISC’s ability to maintain ownership of the building.
“If the court agrees with us that the building is valued at the lower amount, it makes it within our capacity to continue owning the building,” Smith said. “If it is ruled higher, then it gives us a bigger challenge.”
Smith said whatever the outcome, Sonia King, an ISC board member and the daughter of ISC benefactor James Martin, stands ready to assist the ISC.
King is not alone in her willingness to be financially helpful to the ISC, according to Smith, who says she is part of a consortium that would either donate or loan money for the acquisition of the building.
The Sept. 22 valuation hearing will probably delay the original deadline for filing a Chapter 11 emergence plan, originally set for Sept. 28, Smith says.
“Due to the lateness of the court hearing, we will ask for another extension. Some of the activity has been relatively slow, such as the settlement on the building. Until we get all these decisions behind us, we won’t be able to put a plan together. We will need more time,” Smith said. “So at this point, we’re not sure when our plan will be submitted. We’re assuming that the court will treat us fairly.”
In other action, the ISC has filed four separate legal complaints against vendors paid before its Chapter 11 filing.
According to the bankruptcy proceedings, the suits are a means of recovering the payments to those companies made within 90 days prior to the bankruptcy filing on Dec. 31, 2010.
If the total amount is recovered, ISC would be refunded an estimated $93,400.
Defendants include Steve Blankenbeckler of Pulp Printing; Hillhouse Graphic Designs; Mail Works; and Carrier Painting & Construction.
Pulp Printing is being asked to return $8,564; Carrier Painting and Construction, $12,000; Mail Works, $12,872; and Hillhouse Graphic Designs, $60,000.
“Those vendors were paid within 90 days prior to our filing – in mid-October. In mid-October, we hadn’t even discussed Chapter 11 and we went ahead operating as usual,” Smith said. “They received payments that are legally considered to be preferential treatment. In other words, those vendors were paid more than other creditors will be (because of the filing).”
Smith said in order to treat “everyone fairly,” those vendors are being asked to return the money they were paid in October.
“They will get some money back, of course, but that amount is yet to be determined,” Smith said.
The ISC is still working with three of those four vendors as well as others, Smith said.
“We’re working with almost all of the vendors we had in the past,” he said. “I know that sounds unusual, but we’re paying them as they do the work, so we’re not creating any more debt. We’re loyal to our vendors and they’ve been loyal to us.”