First hearing held in Lexington Blue bankruptcy case but without owner Brad Pagel
AI-generated summary reviewed by our newsroom.
- Bankruptcy court sealed names of 263 clients as Lexington Blue seeks reorganization
- Attorney proposes assigning contracts to third parties despite limited assets
- Attorney general alleges $4.8M in unfulfilled work; civil and criminal probes continue
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Herald-Leader investigation into Lexington Blue
Lexington Blue, a local roofing company, is being investigated by the Kentucky attorney general for fraud.
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A federal judge agreed to seal for now the names and contact details of at least 263 former Lexington Blue clients while an attorney for the business attempts to find contractors for their roofs.
The ruling by U.S. Bankruptcy Judge Gregory R. Schaaf came in the first hearing involving the failed roofing company, which closed abruptly in April. Many customers told the Herald-Leader they paid thousands of dollars for roof work that was never done.
A handful of Lexington Blue customers attended the bankruptcy hearing on Thursday, but owner Brad Pagel did not.
Lexington Blue attorney, J. Christian A. Dennery, did not say why business owner Pagel was not in court to answer questions under oath or where Pagel is.
In a comment to the Herald-Leader after the hearing, Dennery said Pagel “is lost in the wilderness, a broken man.”
Lexington Blue filed a petition for Chapter 11 or reorganizational bankruptcy on June 16, alleging $3.2 million in debts and less than $50,000 in assets.
Dennery told Schaaf that “Lexington Blue has no assets, no materials and no staff. The only asset in existence now is the contracts with the 263 customers.”
Dennery proposes bundling the contracts and having the court “assign” them to willing third-party contractors who could then do the roofing work for what they could get in remaining payments. He said he hopes to have a plan in place within the next 60 to 90 days.
A client list with no value
The U.S. Trustee in the bankruptcy case expressed skepticism that this plan would work since Pagel previously attempted to sell the same set of contracts for 1 cent each, and the deal fell through.
Attorney Bradley M. Nerderman, representing the U.S. Trustee’s office, which is part of the U.S. Department of Justice, argued that the client list has no value because all the previous payments are gone.
But Schaaf agreed to let Lexington Blue make the attempt, for now.
Some of the parties, Schaaf said, “are arguing this case should not be here. I have similar concerns. But that isn’t (the motion) in front of me.”
He also said he wonders if the homeowners would want Lexington Blue to handle arranging their home repairs, “if these people, who at least in their minds have been defrauded, would trust them again,” Schaaf said. “I don’t know.”
Dennery said that he’s recently gotten more (although still incomplete) bank records for Lexington Blue that could result in recovery actions to provide money “to fill in the gaps” for customers who, in some cases, paid more than half of their roofing costs upfront.
“There may be some villains out there. We’re looking through the records,” Dennery said. He said they hope to find out “exactly what happened to the missing deposits.”
Lexington Blue barred from conducting business
There also may be many more former Lexington Blue customers impacted than the 263 acknowledged in Pagel’s filing. Two Louisville attorneys who have filed a potential class-action lawsuit against Lexington Blue said that they were not sure if the clients they represent are among the 263.
Kentucky Attorney General Russell Coleman’s office has filed a civil suit in Fayette Circuit Court against Pagel and Lexington Blue and contends that the company “may have accepted deposits from between 300 and 429 consumers without delivering services. In 2024 alone, it accepted $4.8 million in consumer payments for 329 projects, the majority of which appear unfulfilled.”
And there is a restraining order in place that could impede the entire plan: The Fayette Circuit Court barred Lexington Blue from conducting any business, including new contracts. The court has frozen the bank accounts of Pagel and Lexington Blue, as well as those of Pagel’s colleague Alex Southwell.
The attorney general’s office, which was also at the bankruptcy hearing, said they still plan to pursue “restitution and disgorgement of, for lack of a better word, the ill-gotten gains.”
A meeting of Lexington Blue creditors is planned for July 18 at 2 p.m., via teleconference. The conference call number is 888-330-1716; participant code is 4835137.
This story was originally published June 26, 2025 at 12:46 PM.
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