Wachovia: Gainey owes $238 million

Read the lawsuit  (pdf)

By Tony Tagliavia and Suzanne Geha

GRAND RAPIDS, Mich. (WOOD) -- Gainey Corporation, the major West Michigan employer founded and led by prominent philanthropist Harvey Gainey, faces a court complaint from Wachovia Bank, claiming Gainey Corp. has defaulted on loans and owes $238 million.

Wachovia alleges the Wyoming-based transportation firm wasn't making appropriate payments by late March. The bank is asking the court to appoint a receiver to manage Gainey Corp.'s assets.

The complaint, filed Friday in Kent County Circuit Court and obtained by Courthouse News Service, states Gainey Corp. appointed a "chief restructuring officer" in early February to try and right the corporation's financial condition.

Gainey Corp. had a $260 million credit line from Wachovia, according to the complaint. Other firms are named in the complaint, but the bank alleges Gainey Corp. or its subsidiaries wholly own them.

Gainey Corp. released this statement late Tuesday night --

"As a matter of Company policy, we do not typically comment on the specifics of ongoing litigation. However, the current financial crisis and its impact on lenders, notably including Wachovia Bank, are compelling some lenders to make hasty and ill-advised decisions. Gainey Corporation has sound business fundamentals, which include positive cash flow and operating income, and continued solid performance in the face of inflated fuel prices and general economic conditions. The Company views the lawsuit as an attempt to undermine our on-going negotiations," said Harvey N. Gainey, CEO.

"Our 2,300 dedicated employees remain focused on providing a superior level of transportation service to all our customers - who include a majority of the Fortune 500 and most of America's leading retailers, consumer brands and manufacturers."

Earlier this week, Citigroup offered to purchase Wachovia in the wake of the banking crisis. The deal could be finalized by the end of the year.

Harvey Gainey, who continues to serve as chairman and CEO, founded the transportation firm.

He has been heavily involved in philanthropic efforts in West Michigan, donating to the Van Singel Fine Arts Center near Byron Center, and almost single handedly rescuing the Broadway Theater Guild. He was a major donor for the athletic fields for Grand Rapids Christian Schools and the Gainey Family YMCA.

Gainey Transportation sent some of its trucks loaded with supplies to the South after Hurricane Katrina damaged the area in 2005.

Harvey Gainey owns several companies in metro Grand Rapids, most notably Gainey Transportation Services, as well as Gainey Insurance Services, Super Service, Freight Brokers of America, Aero Bulk Carrier, and LCT Transportation Services, Inc. He also has owns Gainey Realty and Investment, and Gainey Aircraft Corporation, according to the lawsuit.

Gainey is a Grand Valley State University Foundation trustee. For years, he has underwritten the WOOD TV8/WOTV 4 Salvation Army Angel Tree program.

On the Net:

The lawsuit in the case (pdf)

Gainey Corporation

Wachovia