State grant winner sued
An Elmsford manufacturer due to receive a $5-million state grant to aid its relocation in the region has been sued by a supplier seeking contractual payments that it claims the manufacturer”™s new owner would not honor.
San-Mar Laboratories Inc., a contract manufacturer of over-the-counter drugs and health and beauty treatment products, in December was awarded the grant from the Empire State Development Corp. It was the second largest award among 61 private and municipal projects in the seven-county mid-Hudson Valley region that were approved for a total of $67 million in state funding in the first year of Gov. Cuomo”™s regional economic development strategy.
State officials said the grant would assist the company”™s proposed relocation from its 135,000-square-foot plant in the Elmsford Distribution Center to a still undetermined site in Putnam County. One of San-Mar”™s founding principals and executive vice president, Frank V. Penna, last month said the 36-year-old company was looking at sites for new plant construction and planned to expand and technologically modernize its business. He said the company could have more definite plans by January.
One of San-Mar”™s unpaid suppliers, Javic L.L.C. in Edison, N.J., listed the unknown new ownership as “John Doe Corp.” in a lawsuit filed in late December in state Supreme Court in Westchester County. San-Mar Laboratories and its three original co-owners also are named as defendants.
The company”™s new owner recently registered with the state Department of State as SML Acquisition L.L.C.
Javic, a chemicals supplier, claims it is owed approximately $150,000 from the Elmsford company. The supplier”™s New York City attorney, David M. Oddo, in court papers said San-Mar “stopped doing business entirely and is a non-operating entity without assets.” The new owner, however, has continued company operations since seizing control of San-Mar last September, when installment payments that San-Mar”™s founding owner and president, Marvin Berkrot agreed to six months earlier were stopped, according to the lawsuit.
The new ownership entity in the court complaint is said to have ordered the breach of contract and convinced San-Mar principals to do so “by threatening to withhold or cease all temporary infusion of capital, as well as threatening to reconsider the purchase and/or acquisition of San-Mar.”
“It”™s a mess,” Oddo said recently.
San-Mar in 2010 was awarded a Jobs Now grant of up to $750,000 from Empire State Development to keep the company in Elmsford ”“ where it agreed to invest about $1.9 million in improvements and create 115 additional jobs – and to keep it from leaving New York or from being sold to a competitor, state officials said in 2010.
Aimee Vargas, mid-Hudson regional director for Empire State Development (ESD), last month said San-Mar”™s relocation plans followed an ownership change at the company. The new owner will return any state funds due back from the previous grant for failing to meet job-creation numbers in Elmsford, she said.
Meanwhile, the status of San-Mar”™s relocation plans is unclear. Penna, whom court papers described as a consultant to the new owner, did not respond to an email request for comment.
Vargas, who heads the ESD office in New Windsor, did not respond to phone and email requests for comment.
Kevin Bailey, president of the Putnam County Economic Development Corp., did not return a call for comment.
Westchester County Economic Development Director Laurence Gottlieb said he knew nothing about the company”™s plans.