News Summary
Kentucky Attorney General Russell Coleman seeks to dismiss the Chapter 11 bankruptcy filed by Lexington Blue, arguing it is a delay tactic in ongoing legal actions regarding alleged fraud against homeowners. The law office claims the dismissal is crucial for protecting public interests, especially for consumers impacted by the company’s practices. The case reveals significant financial discrepancies and a growing number of creditor claims, raising concerns about consumer protection in the state.
Lexington, Kentucky – Kentucky Attorney General Russell Coleman plans to file a motion seeking the dismissal of the Chapter 11 bankruptcy filed by Lexington Blue and its owner, Brad Pagel. Coleman and his office argue that the bankruptcy proceedings are a “strategic delay tactic” that obstructs necessary legal enforcement efforts in ongoing state court actions against the company and Pagel.
According to the Attorney General’s office, dismissing the bankruptcy case is critical for protecting public interest and vulnerable consumers affected by the business practices of Lexington Blue. Although Coleman has requested a hearing date regarding the dismissal motion, as of Thursday afternoon, the motion had not yet been filed. A creditor meeting to discuss the bankruptcy is scheduled over the phone for July 18 at 2 p.m.
The Attorney General’s push follows a consumer protection lawsuit filed against Lexington Blue and Pagel in May. The suit arose from numerous claims by homeowners who allege that Pagel defrauded them by charging for roofing work that was never completed. Reports from former employees indicate that Pagel operated the company in a manner resembling a “cult of personality,” creating an environment where employees felt compelled to remain loyal.
In recent developments, Fayette County Circuit Judge Dianne Minnifield issued a temporary restraining order that freezes the assets of Pagel, Lexington Blue, and individuals associated with Pagel. This asset freeze has been broadened to include Pagel’s wife, Courtney, and several former employees.
Brad Pagel filed for Chapter 11 bankruptcy protection in June, claiming an address in Pensacola, Florida, as his new mailing address. His filing indicates that Lexington Blue owes at least 263 creditors a cumulative total of $3.2 million. However, the Attorney General’s office suggests that Lexington Blue’s actual liabilities may approach $5 million, attributed to incomplete roofing contracts and other factors.
Further complicating matters, Lexington Blue’s bankruptcy proceedings have revealed discrepancies regarding its financial reporting. Investigations conducted by the Attorney General’s office indicated that the company misled the court concerning approximately $300,000 it had already received from customers, whom the AG’s office referred to as “victims.”
The number of creditor claims related to Lexington Blue’s bankruptcy has been increasing, notably including a claim from the Equal Employment Opportunity Commission (EEOC) for $1.15 million. Other claims include $15,450 owed to Burton Properties for unpaid rent and over $12,000 claimed by the Internal Revenue Service. Additionally, Kentucky Farm Bureau Mutual Insurance Company has initiated two lawsuits against Lexington Blue related to unpaid roofing jobs for homeowners.
The ongoing situation raises significant concerns about consumer protection in Kentucky as the case unfolds. The Attorney General’s commitment to pursuing legal action against Lexington Blue and Brad Pagel highlights the state’s efforts to safeguard residents from fraudulent business practices. As the court proceedings progress, further developments are anticipated that could impact both the bankruptcy case and the pending lawsuits against the company.
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LEXINGTON STAFF WRITER The LEXINGTON STAFF WRITER represents the experienced team at HERELexingtonKY.com, your go-to source for actionable local news and information in Lexington, Fayette County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Woodland Art Fair, Crave Food and Music Festival, and Railbird Festival. Our coverage extends to key organizations like Commerce Lexington and Blue Grass Community Foundation, plus leading businesses in education, manufacturing, and technology that power the local economy such as University of Kentucky, Toyota Motor Manufacturing, and Lexmark. As part of the broader HERE network, including HEREBowlingGreen.com and HERELouisville.com, we provide comprehensive, credible insights into Kentucky's dynamic landscape.
