NEW YORK — A federal judge in Manhattan has agreed to a partial freeze of Addiction Recovery Care’s assets, leaving the company with some money for daily operating expenses.
Angelica Capital Trust filed a petition seeking to freeze the company’s assets earlier this week, after ARC defaulted on repaying a loan to Angelica.
Back in November, Angelica paid ARC $5.4 million to buy $8.1 million in employee retention tax credits the company anticipated receiving. But when ARC received the checks from the IRS in December, it kept and began spending the money, rather than turning the money over to Angelica, as agreed.
On Thursday, U.S. District Judge George Daniels determined that Angelica is entitled to relief and agreed to an injunction.
“Petitioner [Angelica] has demonstrated that it will suffer irreparable harm absent a preliminary injunction freezing certain liquid assets in respondents’ [ARC’s] possession because respondents are ‘on the brink of insolvency,’” Daniels wrote in his order. “Further, respondents do not contest that they are likely to lose on the merits of this contractual dispute. Finally, the balance of hardships and public interest tip decidedly in petitioner’s favor as respondents readily admit that they have withheld and spent a significant portion of petitioner’s funds.”
In previous court filings, ARC said it had only $5.7 million in the bank. Daniels ordered a freeze on $4.7 million of that amount, leaving ARC with $1 million for daily operating expenses that is expected to last until Feb. 4, when the company expects a sale of its assets to be completed.
But that amount is less than ARC has claimed it needs to operate. In a previous court filing, ARC claimed its biweekly payroll is $1.2 million.
A copy of the judge’s order follows: