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Lexington Blue Roofing Company Files for Chapter 11 Bankruptcy

Front of a roofing company office with a bankruptcy notice in Lexington, Kentucky.

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News Summary

Lexington Blue Roofing Company has filed for Chapter 11 bankruptcy protection amidst over $3.2 million in debts and allegations of fraud. Owner Brad Pagel’s filing provides a potential path for reorganization as the company faces a lawsuit from the Kentucky Attorney General, freezing Pagel’s assets and halting business operations. Complaints from consumers and former employees detail unpaid roofing repairs and fraudulent activities. With assets under $50,000 and claims from at least 263 customers, the company’s situation continues to deteriorate with a class-action lawsuit also underway.

Lexington, Kentucky – Lexington Blue Roofing Company has filed for Chapter 11 bankruptcy protection as it grapples with over $3.2 million in debts and allegations of fraud. The filing was made by owner Brad Pagel on Tuesday, providing the company with a potential path for reorganization while it seeks to address its financial obligations to creditors, which include former customers, employees, and government agencies.

The bankruptcy comes amid a lawsuit initiated by the Kentucky Attorney General’s office. This legal action has resulted in a court order that freezes Pagel’s assets and halts all business operations of Lexington Blue, reflecting the company’s significant legal troubles. A stated concern from former customers indicates that many have paid for roofing repairs that were never completed, sparking serious scrutiny of the company’s practices.

Not only have consumers voiced their dissatisfaction, but former employees have described the business atmosphere as cult-like, with allegations of facilitating fraudulent activities including insurance fraud. These claims have added a layer of complexity to the company’s legal and financial predicaments.

Pagel’s bankruptcy documents reveal that Lexington Blue’s financial situation is dire, indicating assets worth less than $50,000 against debts exceeding $3.2 million. The company owes money to at least 263 customers across various cities in Kentucky, including Lexington, Louisville, Frankfort, Georgetown, Nicholasville, Paris, Versailles, and Richmond, as well as to some individuals in Ohio. A prominent creditor is the Kentucky Labor Cabinet, which is claiming $700,000 related to a workers’ compensation issue.

The Internal Revenue Service (IRS) and the Kentucky Department of Revenue are also among the company’s creditors, although the specific amounts involved remain undisclosed. Additionally, a case filed with the federal Equal Employment Opportunity Commission (EEOC) involves at least 28 former employees alleging a hostile work environment, seeking $700,000 in compensatory and punitive damages.

Pagel has cited a cycle of high-interest merchant cash advance loans as a contributing factor to the company’s debts, with these financial strains severely depleting cash flow. Although Lexington Blue reported nearly $6.3 million in sales and over $2 million in gross income in 2023, it still incurred a business loss of $129,611 post deductions. This imbalance has been exacerbated by operational issues that emerged in mid-2023, including challenges in collections and a problematic transition to a new bank that resulted in account freezes.

The turmoil intensified further in August 2024 when a manager allegedly established a competing roofing company, utilizing the staff and resources from Lexington Blue. Earlier in the year, Pagel even sold his home for over $1 million in an effort to infuse capital into the struggling business.

As of April 2025, Lexington Blue had to abruptly stop all operations due to overwhelming customer complaints, which forced the company to lay off numerous employees. At present, the bankruptcy documents contain a request to keep the list of customers owed money confidential, likely to prevent interference from potential bidders seeking to capitalize on the company’s distress.

In addition to the bankruptcy filing, a class-action lawsuit has been filed against both Pagel and Lexington Blue in Jefferson County, accusing them of failing to honor contracts and misappropriating company funds for personal purposes. These ongoing legal proceedings and the bankruptcy filing indicate a rapidly deteriorating situation for the once-thriving roofing company.