Implosion Of Am-Pro - Black Enterprise

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Black Enterprise Magazine July/August 2018 Issue

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It was a modern-day success story. A graduate of the Small Business Administration’s 8(a) program, South Carolina’s Am-Pro Protective Agency Inc. was founded by former S.C. Highway Patrol Officer John E. Brown. The private security company had contracts with the Departments of Defense, State and Energy. Earlier this year, Am-Pro was ranked No. 56 on the BE INDUSTRIAL/SERVICE 100 list with revenues of $36.8 million. Now it’s gone.

After Am-Pro filed for Chapter 11 bankruptcy on May 19, NationsBank, its main creditor, won a petition to lift bankruptcy protection in September, clearing the way for the company’s liquidation.

Ask what led to the concern’s downfall and you’ll get two distinctly different stories depending on who’s telling the tale. Brown points the finger at NationsBank, citing the lender’s refusal to increase his line of credit and their unwillingness to: extend the company a $1.3 million loan to pay back taxes to the IRS. Others blame Am-Pro’s downfall on Brown’s mismanagement and lavish spending.

Federal audits and the company’s bankruptcy filing show Am-Pro’s financial problems had been building over several years. From 1985 to its filing, the company was plagued with a succession of chief financial officers who Brown blames for inadequate accounting systems. Those systems led to financial problems that included underbillings of $5 million to the State Department, excess charges to the Strategic Defense Unit and a lawsuit with 400 employees that ultimately cost the company $2 million in settlements and legal costs. In addition, tax assessments, interest and penalties nearly caused the IRS to shut the company down.

But there were more problems. In 1995, two audits by the Defense Contract Audit Agency led to a demand that Am-Pro pay back $877,167 in excess charges on the contract, which Am-Pro later lost. The concern also lost several contracts, including a lucative deal with the State Department worth $70 million.

That same year NationsBank, which earlier had loaned the company $3.7 million, took over Am-Pro’s credit line, forcing the company to put its liquid assets into a special account that the bank controlled. The move gave NationsBank ultimate decision-making power over which payrolls and bills would be paid.

Despite the company’s financial problems, Am-Pro’s bankruptcy filing cites expenses including Brown’s $1.3 million-dollar home, limousines, Mercedes, 24-hour guard services for his home and other expenses.

Yet Brown blames his troubled relationship with NationsBank for many of his problems. He cites the credit extension refusal and the bank’s control of his receivables as factors preventing him from making payrolls. Brown insists he left the bank in 1990 to pursue a larger line of credit and says he was only lured back several years later with promises of a $5 million line of credit that never materialized. He says the bank also promised to extend him additional funding if the company would file for bankruptcy. That too never materialized, he says.

“If we’d never gone to NationsBank we’d still be in business today. If they had worked with us, we really would have salvaged the business,” Brown says. “The bank

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