A company that sells promotional apparel for Bolder Boulder and other athletic events will shut down soon if a judge does not order Chase Bank to unfreeze its bank account.
The existential turmoil at North 40 Supply Co. in Lafayette follows a deadlock between its two owners over a buyout provision that then devolved to include allegations of financial impropriety and retribution. So, Chase isn’t allowing withdrawals from the company account.
“(Chris) Ekx will run out of money to run the company within weeks,” his lawyers warn.
Ekx and Tom Stead started North 40 in 2018. Ekx, the 51% owner, handles operations and Stead, the 49% owner, handled the finances. The pair initially planned to be 50-50 owners but, in a moment of foresight, worried that could result in gridlock, according to Ekx.
Chris Ekx (North 40 Supply Co.)
By late 2023, Stead was ready to move on and Ekx agreed to buy him out, the latter recalls.
“My departure will not carry any negative impact on the company moving forward,” Stead wrote in a letter to North 40 clients last summer, “and we anticipate a smooth transition.”
It has not been a smooth transition. Stead and Ekx disagreed over the buyout amount, so their talks “quickly fell apart,” in the latter’s recollection. And now Ekx is suing Stead.
Ekx claims that his business partner has been paying himself from the company bank account and charging his family vacations and veterinary bills to a company credit card. To prevent this from continuing, Ekx had Stead removed as a signer on the bank account, he says.
Stead, in turn, blocked Ekx’s access to the company’s accounting software in March and canceled the company credit cards, except for the one he continues using, Ekx claims. The next month, Stead asked Chase to restore his access to the bank account. The bank instead froze its $400,000 until the matter is resolved, either by Stead and Ekx or a judge.
Tom Stead (LinkedIn)
“Since being locked out of the bank account, Ekx has been funding the company using his own personal money,” his lawyers wrote in last month’s lawsuit. “This has allowed Ekx to keep the company solvent and operational for the time being, but it is only a temporary solution.
“If Ekx’s access to the company’s bank account is not restored in the next couple weeks, Ekx will run out of funds and the company will have to go out of business,” they warned.
District Judge Michael Kotlarczyk has scheduled an emergency hearing on the matter for Friday afternoon in Boulder. Ekx is not seeking damages in the case, just access to the Chase bank account, the company’s accounting software and its credit card account.
Stead’s attorney, Ty Gee at Haddon Morgan & Foreman, declined to comment on the case.
Ekx’s lawyers are Rohn Robbins, Doug Stevens and Travis Miller at Caplan & Earnest.