Kentucky investors file suit for $1.2 million over failed battery plant in Eastern Kentucky
A group of investors that gave $1.2 million to the failed battery manufacturing plant Enerblu, which promised hundreds of jobs in Eastern Kentucky, has sued two of the company’s executives to retrieve its investment, according to filings in Pike County Circuit Court.
The lawsuit, first reported in the Appalachian News-Express, claims that Enerblu executives made deliberate misrepresentations to local investors about the financial and operational viability of Enerblu.
Pikeville EB Investors, LLC., which filed the suit last month, claimed that Enerblu failed to give investors advanced notice that the company was struggling to raise enough money to build its battery manufacturing plant, a project hailed by local and state officials as a way to bring much-needed jobs to the region.
The investment group argues that Enerblu’s Executive Chairman Michael Weber and its CEO Dan Elliott should be required to pay back the $1.2 million that the investors wired to Enerblu in March of last year.
When Enerblu first announced in December 2017 that it would build a $400 million battery manufacturing plant at an industrial site near Pikeville, state and local leaders jumped to support the project and the 875 full-time jobs that it promised.
Ray Jones, the current Pike County Judge-Executive, said at that time the project would be a “game-changer” for Pike County and Eastern Kentucky in general. Gov. Matt Bevin called the project “transformative,” and U.S. Rep. Hal Rogers was similarly optimistic: “We’ve dreamed about this day,” he said.
Jones’ lawfirm is now representing the investor group suing the company. An attorney representing the Enerblu executives declined to comment.
As the project moved forward from its initial announcement, delays mounted and Enerblu officials began to grumble about alleged problems at Pikeville’s industrial site. At the annual Shaping Our Appalachian Region Summit last year, Bevin and Rogers announced a $6 million grant from the state Energy and Environment Cabinet to help build up the site.
By the end of January 2019, the company had announced it would delay construction for one year. One month later, it officially suspended its plans to build in Pikeville.
Enerblu filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court of Nevada in June.
According to the investors’ lawsuit, Elliott and Weber both misrepresented the amount of funding that Enerblu has secured for its project while making “an aggressive effort” to raise money from business owners and residents in Pike County and other parts of Eastern Kentucky.
Enerblu’s bankruptcy filings show that the company has just $929 in its bank account. It also claims to own about $109,000 of machinery and other equipment, putting its total assets at $110,500.
The company lists a total of 90 creditors and claims totaling $3.24 million, including an undetermined amount to Pikeville EB Investors and the City of Pikeville.
According to court records, Elliott received a $240,000 salary in 2018, along with $30,000 in consulting fees, $77,000 in reimbursed expenses, and a $53,000 relocation fee. Weber received a $231,000 salary, with $42,000 in consulting fees and $7,800 in reimbursed expenses last year.
Weber, according to his LinkedIn profile, is also the executive chairman of a Nicholasville insurance company called MRW Group, which has a claim with Enerblu for $1.3 million.
This story was originally published September 3, 2019 at 3:43 PM.