Four New Bankruptcy Filings add More Mystery…and Misery…in the Riverwood Cabins Case

A few weeks ago, I posted about the Riverwood Cabins, LLC Bankruptcy, which was notable to me because of the scope and magnitude of the amount of money that the Riverwood cabin buyers lost.

It’s a case where about 65 customers (and that number continues to grow) are asking what happened to their $4.5 million in deposits (also a growing number). The customer deposits appeared to evaporate into thin air in the months before the Bankruptcy case was filed.

One of the biggest questions was when the related companies were going to file their own bankruptcy cases (and why hadn’t they already?). The hope was that, when that happened, maybe we’d get some answers then.

Well, we know the first part: Woodtex, LLC, Woodtex of New York, LLC, Woodtex of Tennessee, LLC, and Woodtex of Texas, LLC all filed their own Chapter 7 bankruptcy cases in Nashville Bankruptcy Court late on Monday afternoon.

As far as answers beyond that, the filings don’t do much else, but add more questions.

And more aggrieved customers. These filings show that there’s at least twice as many customers who lost their deposits, with these deposits still being unaccounted for.

But, strangely, there’s not that much debt owed, relative to the deposits that the companies were constantly taking in. With this much money coming into the company (as deposits), you’d expect to see an equally staggering amount of unpaid bills.

The only good news for the Woodtex customers is that, because the Woodtex entities focused on sheds and smaller buildings, the deposits are about 10% of the money that the Riverwood Cabins customers lost.

Riverwood Cabins Files for Bankruptcy, with more than 4 Million in Customer Deposits at Issue

Ten or 12 years ago, it wasn’t a shock when a builder filed for Bankruptcy and left behind dozens of half-completed projects and unaccounted for customer deposits in its wake of discharge and dispair.

But, in our modern/better/faster/stronger economy, I was really surprised to see Riverwood Cabins, LLC file a Chapter 7 Bankruptcy in Nashville a few days ago.

Riverwood Cabins builds prefabricated cabins and modular log homes for customers (generally in Tennessee), and then delivers the cabins nationwide to the customer’s land for assembly.

Per the Bankruptcy Schedules, Riverwood claims assets of $265,205.18, and total debt of about $5,900,000.

Of that debt, here’s what’s mind-blowing: that debt includes $4,468,842 (*) in unaccounted for customer deposits that are claimed as debts.

To be clear, the customers who paid 50% down as a deposit for the cabin, and, now, that money is gone and entirely unaccounted for.

This isn’t a few dollars short here and there. This is 4 MILLION dollars.

In the Great Recession, a little shortage here and there wasn’t a shock.

Builders would dip into a little bit of funds from Project C so that they could finish up Project A. Then, a few weeks later… in order to finish Project C, they might dip into the funds on Projects E and F. In the end, the whole scheme would come crashing down when the shortages outpaced the new contracts from new customers.

But I haven’t seen this type of shortage before.

I’m literally shocked by the large number of customers (about 65) who don’t have cabins or any explanation of where their cabins–or their deposits–are.