They may have just been looking for a refreshing dip, but customers working with Connecticut’s Roy’s Pools — and multiple area subcontractors — have been left high and dry after the company filed for Chapter 7 bankruptcy on December 30, 2021.
Reportedly, dozens of customers have been left with construction unfinished. Customer Ed Staples noted that company owner Brian Roy seemed more concerned with planning more work than completing work, saying “He was interested in talking to us about additional services, was looking to take a deposit for him to build a deck onto the pool.”
“Very quickly after receiving the check he indicated, ‘Oh, I don’t think we can do it this soon. How ‘bout the spring?’,” said Staples about working with the company.
In total, 32 former customers of Roy’s Pools are listed as creditors in its bankruptcy filing following the company’s alleged lack of work, noting thousands of dollars lost to unfinished pool or deck installations.
However, the situation isn’t just affecting clients of the company: Contractors and suppliers that have worked on these projects are also going without payment, with four subcontractors claiming a total of $102,266.15 in nonpayment. This includes:
- Baystate Pool Supplies: $24,266.15
- Phoenix Products Company, Inc.: $40,000.00
- Radiant Pools Trojan Leisure Products, LLC: $16,000
- SCP Distributors, LLC: $22,000
The path to repayment is difficult in a situation like this, but not impossible.
Due to Roy’s Pools’ bankruptcy proceedings, the company is protected by the “automatic stay” — a provision that stops any actions by creditors to collect their debts from the bankrupt party. The automatic stay is what is keeping a number of the company’s creditors from filing a legal claim. Roy’s Pools has $545,575.32 in total liabilities, but only $270,298.32 in assets, most of which is company inventory and equipment.
“Those who put deposits on pools and never had construction completed are unfortunately on standby waiting to see what they will receive in this instance, which in all likelihood appears to be very little,” said attorney Brian Marks, professor at the University of New Haven.
However, the automatic stay doesn’t overpower something like a mechanics lien, meaning that the company’s unpaid contractors may be able to file liens on their projects and regain their payment.
As construction lawyer Nate Budde notes, construction projects like those that Roy’s Pools worked on aren’t part of the company’s estate, and thus aren’t subject to the rules of the automatic stay.
Not only does this allow for certain parties to act on claims during the automatic stay, liens can actually be filed after the stay goes into effect.
“Because the Bankruptcy Code provides certain exceptions to the automatic stay, including allowing a creditor to perfect an interest in property that attached prior to the filing of the bankruptcy petition,” says Budde, “mechanics liens may generally be filed (perfected) after the automatic stay has been triggered.”
The automatic stay doesn’t protect companies from criminal liability, either — something that the Connecticut State Police put in focus by noting that they’re investigating multiple larceny complaints against the company’s ownership.
“You hope someone acted in good faith to the extent they may not have, if they’ve committed fraud or engaged in criminal activity we go from the civil arena to the criminal arena,” says Marks. “Unfortunately, it is the consumer who is put in a very difficult situation who may never ever receive those funds back.”