Las Vegas Color Graphics - Case Summary

Business Description

JAL Equity Corp. (“JAL”) and its Debtor subsidiaries operate a portfolio of marketing, printing, signage promotion, and e-commerce businesses. The Debtors are among the nation’s largest printers, providing custom print, marketing, and logistics solutions to a diverse client base ranging from Fortune 100 companies to regional small businesses.

• Through their production facilities, the Debtors print and distribute mailers for prominent national brands, including Macy's and American Express, as well as for affiliated entities such as Growmail, L.LC and Money Mailer, LLC.

---

Corporate History

JAL Equity Corp. was founded by Eran Salu, its current president, and serves as the ultimate parent of the Debtors. JAL is the sole member of ColorArt, which in turn is the sole shareholder of LVCG.

---

Operations Overview

The Debtors conduct their operations across three large-scale production facilities located in Las Vegas, Nevada; Iowa; and Missouri.

Workforce and Shared Services Agreement

• As of the Petition Date, the Debtors’ operations are supported by approximately 220 individuals on a consolidated basis, comprising 54 salaried and 166 hourly personnel (collectively, the “Employees”).
• The Employees are formally employed by a third-party provider (“Provider”) under a Shared Services Agreement (“SSA”). The Provider is responsible for day-to-day supervision, legal compliance, and administration of compensation, benefits, and workers' compensation coverage.
• Under the SSA, the Debtors are required to reimburse the Provider for all associated employment costs, which are categorized as follows:
  • Direct Employment Costs: Includes wages, employee benefits, insurance, termination benefits, and employee expenses.
  • Indirect Employment Costs: Includes hiring costs, liability insurance premiums, and other administrative expenses incurred by the Provider.
• These costs are apportioned among the individual Debtor entities. The average gross payroll obligation per pay period is approximately $600,000, with wages paid bimonthly in arrears.

Operating Expenses

• In the ordinary course of business, the Debtors incur expenses for essential utility services, including electricity, gas, water, internet, and telecommunications.
• Based on a six-month historical average, the Debtors’ aggregate monthly utility costs are approximately $158,348.

---

Prepetition Obligations

As of the Petition Date, the Debtors’ primary funded debt obligation consists of approximately $25.3 million outstanding under a revolving credit facility.

Revolving Credit Facility

• On June 6, 2024, the Debtors entered into a Credit and Security Agreement with Aequum Capital Financial II LLC (“Lender”) for a revolving credit facility of up to $30 million.
• The facility is structured as a formula-based loan, with advances determined by the value of the Debtors’ inventory, accounts receivable, and equipment. Repayments are made as accounts receivable are collected.
• As of the filing, the outstanding balance was approximately $25.3 million, composed of $24.8 million in principal and $441,148 in interest and fees.
• The obligations are secured by a first-priority, continuing security interest in substantially all of the Debtors’ assets.
• In connection with the facility, parent company JAL executed a Validity and Support Agreement, obligating it to provide certain shared services, including payroll administration funded by the Debtors.

Employee-Related and Other Obligations

• Cash on Hand: As of the Petition Date, the Debtors held approximately $1.85 million in their deposit accounts.
• Unpaid Wages: The Debtors have accrued and unpaid wage obligations totaling approximately $506,987 ($176,048 for LVCG and $330,939 for ColorArt).
• Benefit Contributions: Accrued but unpaid contributions for employee benefit plans, including 401(k), health, and disability programs, are estimated to be no more than $173,201.
• Garnishments: The Debtors estimate that less than $10,000 in garnishments have been withheld but not yet remitted.
• Utility Payments: The Debtors believe they are substantially current on all utility obligations that were due on or before the Petition Date.

---

Events Leading to Bankruptcy

The Debtors’ path to Chapter 11 was precipitated by an acute dispute with their senior lender, Aequum Capital Financial II LLC (“Lender”), which culminated in the appointment of a state court receiver. On October 7, 2025, the Lender filed a petition in the Circuit Court of St. Louis County, Missouri, seeking the emergency appointment of a receiver and alleging payment defaults, covenant breaches, and a scheme to overstate collateral value.

• According to the Debtors, the Lender’s action was a pretextual maneuver following the Lender’s own breach of the credit agreement. The Debtors assert that the Lender wrongfully refused to fund properly requested draws, which created an immediate liquidity crisis, jeopardized payroll, and led to the loss of at least one large customer.
• On October 29, 2025, the Missouri State Court granted the Lender’s motion and appointed NBML Strategies as receiver over the Debtors’ assets.
• The Debtors state that the Chapter 11 filings were necessary to protect their operations as a going concern, preserve more than 200 jobs, and pursue a reorganization free from the control of the receiver.

Debtors’ Rebuttal to Lender Allegations

The Debtors strongly dispute the allegations that formed the basis for the receivership, characterizing them as misconstrued accounting errors and a refusal by the Lender to use available verification methods.

• Duplicate Invoices: The Debtors acknowledge that duplicate invoices were submitted in 2025 but attribute the issue to an inadvertent administrative error made by a new accounts receivable lead who was implementing new systems. They maintain the error was promptly corrected upon discovery, resulted in no financial shortfall, and was not intended to mislead the Lender.
• Inability to Verify Accounts Receivable: The Debtors contend that the Lender’s claim that it could not verify receivables was inaccurate. While the Debtors declined the Lender’s unexpected demand for direct login credentials to their customer portals, they offered alternative verification methods, including a live screenshare of the portals and direct contact information for their customers. The Debtors argue that any subsequent delays in verification were outside their control.
  • The Debtors further note that in one instance involving four invoices totaling over $2.6 million, the Lender had received an email from the customer’s executive confirming the invoices were “legitimate” more than a week before the receivership motion was filed.
• Opening of New Bank Account: The Debtors state they established a new bank account only as a defensive measure after the Lender began sweeping all cash from their primary accounts while simultaneously refusing to fund advances. They assert this action was necessary to preserve working capital for operations and that all funds were used for ordinary course business expenses.