Fifth Third Bank has filed suit against a struggling Franklin-based software company, its CEO and a subsidiary, claiming the three have failed to repay their debts and have moved money to accounts held at other lenders.
The suit filed last week in U.S. District Court in Nashville says Smart Data Strategies, a 24-year-old mapping software company that has been used by more than 250 clients, and its Technology Distributors Inc. division entered into a number of loan agreements with Fifth Third between 2007 and 2013. The borrowers, including CEO Susan Marlow (pictured), guaranteed the loan, of which some $810,000 is still outstanding.
According to the suit, Smart Data posted a net loss of more than $760,000 from March 1 to May 31 of this year and is insolvent based on its May balance sheet. The company allegedly also owes more than $1 million to other creditors — publicly traded software company Genesys International is due more than $600,000 — and has missed June and July payments to the bank. On top of that, the Internal Revenue Service last month issued a tax lien for almost $62,000.
Fifth Third’s suit also claims that Smart Data is holding more than $200,000 in accounts at other banks, which breaches a 2013 amendment to Smart Data’s loan agreement that specified Fifth Third as the principal depository bank for all three defendants.
According to the suit, Smart Data’s default on the payments and breach of contract entitles Fifth Third to the security agreement collateral — even though it says the company’s software isn’t worth much “because there is no readily available purchaser.” But the bank wants a judge to order Marlow to stop transferring money to non-Fifth Third accounts and eventually deposit that cash back to Fifth Third.
Marlow did not return calls for comment.
POSTDATA: WARRANTY DEEDS