Latest news with #bankruptcy
Reuters
4 hours ago
- Business
- Reuters
India's top court to revisit order scrapping JSW Steel's $2.3 billion Bhushan Power deal
July 31 (Reuters) - India's top court said on Thursday it would reconsider its order that quashed Indian steelmaker JSW Steel's ( opens new tab $2.3 billion takeover of Bhushan Power and Steel, saying the order did not correctly consider past precedents. In May, the Supreme Court rejected JSW Steel's deal for Bhushan Power and Steel six years after it was first approved, unsettling buyers of other distressed assets and casting a shadow over Indian bankruptcy reforms introduced in 2016. JSW Steel subsequently asked the top court to review its ruling. On Thursday, judges heard the review plea and said the verdict quashing the deal did not correctly consider the legal position established by past precedents. "We therefore find this a fit case wherein the judgment under review needs to be recalled and the matter needs to be considered afresh," the top court added. In May, while quashing the deal, the Supreme Court had said there was an "entire spectrum of lacunas and flaws" in the takeover process and decided to scrap one of the most successful insolvency deals in India's history. The top court ordered the liquidation of Bhushan Power and asked banks to return funds which they had recovered during JSW's takeover. However, weeks later it paused the liquidation proceedings, allowing time for JSW Steel to seek a review of the verdict. The Supreme Court will hear the case next on August 7.
Forbes
5 hours ago
- Business
- Forbes
Giant Montessori School Chain Files For Bankruptcy
Just three years ago, Higher Ground was calling itself 'the future of education.' A promotional video touted 'a mission to redesign education from the ground up' with a mixture of 'rigor and individualization' across its family of 150 schools. Now most of those schools have been shuttered by foreclosure, and the company has filed a pre-arranged Chapter 11 bankruptcy plan. Ray Girn graduated from the University of Toronto in 2004 with a BS in Psychology, then went to work in LePorte Schools, a chain of Montessori schools in Southern California. By 2010 he was CEO of the chain and, in his telling, raised a 'nascent family business' into 'what became North America's largest Montessori network.' He also met his wife, Rebecca. In 2016, the Girns launched Higher Ground Education in Austin, Texas. The mission, said Girn, was to 'mainstream and modernize Montessori education through extending its principles across infancy and into high schools.' Rebecca was the Chief Programs Officer and General Counsel. Higher Ground grew both through acquisition and creation. It was the parent group for Guidepost Montessori, a huge network of Montessori schools located across the US and in some overseas locations. The Academy for Thought and Industry, later rebranded Guidepost Academy, that promised 'a school dedicated to a union of classical and Montessori approaches to education: a classical liberal arts emphasis on history and great books, and a Montessori emphasis on independence and agency.' Higher Ground drew the attention of venture capitalists. HGE created their own program for certifying Montessori teachers (MACTE accredited). They acquired a variety of other businesses, including Tinycare, Neighborschools, FreshGrade, and, the remains of AltSchool, the San Francsico-based tech-based microschool start-up that was drawing glowing reviews in 2015, but by 2019 was instead drawing headlines like Fortune's "How an Education Startup Wasted Almost $200 Million." In 2022, Girn announced that he was launching a Montessori think tank called Montessorium. The result was a business that calls itself 'Montessori all grown up.' The Montessorium initiative is headed up by two other Austin entrepreneurs. Matt Bateman also came from LePorte (Girn appears to have brought several LePorte folks with him) and was Higher Ground's Vice President of Pedagogy; currently his LinkedIn profile lists his occupation as Philosopher (self-employed). The other Montessorium leader in MacKenzie Price, an education entrepreneur who has been trying to expand her network of cyberschools into other states. Her signature business is 2HourLearning, which promises that students can get a full education in just two hours a day with a computerized tutor. Montessorium promises to 'combine the full suite of Montessori practices and hands-on materials with a state-of-the-art personalized learning software platform.' The HGE network of schools was also growing. In 2018 HGE operated 12 schools; by 2022, the number as 101, and by 2024, HGE had 150 schools in its stable. And yet, Higher Ground was in trouble. In January of 2025, Bateman left the board. In February of this year, Maris Mendes, Senior Vice President of School Launch at Higher Ground (and another LePorte hire) announced that Girn was leaving the company he had created. And that wasn't the only bad news: We face the reality today, not only of a significant shift in the leadership of the organization, but also the reality that we have made mistakes that we are in the midst of acknowledging and resolving. In our eagerness to meet the vast vision of our mission, we overextended ourselves, growing our school network beyond what we could effectively support, both financially and operationally. As a result, we are now in the midst of closing nearly 1/3 of the school communities that have so lovingly been built over the past 9 years. Girn's bio at his newest venture describes his departure: After some years of growing differences with Higher Ground Education's board and lead investors, in 2025, Ray left the organization to pursue his missionary work on his own terms once again. That disagreement appears to have been over whether to continue the 'hyper-growth' of the business, or to transition to a more 'mature, stable, and profitable' operation. According to court documents, after several board departures, Girn reappointed himself to the board at the end of March, the resigned again a few weeks later. Elliot Haspel at The74 reported analysis by Mendes, then the newly-minted co-CEO: According to Mendes, the driving force behind the closures is the same hyper-scaling strategy Higher Ground's investors saw as a selling point; she writes that, 'In our eagerness to meet the vast vision of our mission, we overextended ourselves, growing our school network beyond what we could effectively support, both financially and operationally.' By the end of May, virtually all HGE executives, including Mendes, had left to join Guidepost Global Education (GGE), an international operation that shares the same branding and logo as HGE's Guidepost Montessori. At this point, court documents note, HGE did not have any elected officers. Just seven schools remained in the HGE portfolio. An e-mail to Higher Ground Education for comment was returned as undeliverable. On June 27, Higher Ground Education, LLC, filed a pre-arranged Chapter 11 bankruptcy plan with the United States Bankruptcy Court for the Northern District of Texas. It states that in early 2025, HGE defaulted on several key loans and could not secure refinancing or new capitol, resulting in the foreclosure and sale of the vast majority of their assets and schools. "The Debtors simply could not maintain or generate sufficient liquidity to fund operations," the disclosure statement explains, despite having raised over $335 million in funding since 2020. The statement also reveals tyhat the business "has never had positive cash flows from operations—resulting in the continuous need for external funding." Operating losses exceeded a staggering $440 million over the past five years. That negative cash flow included both losses at the school level and monthly corporate costs of $2.5 million. Many attempts at finding the money failed. 2HourLearning is proposed as the plan sponsor, providing $8 million to finance the bankrupcty case. 2HourLearning would acquire the company that results from the restructuring. GGE would contribute some intellectual property and curriculum assets back to the new company. The U.S. Department of Justice has already spoken up in objection to the $8 million funding and menuevers that promiote junior creditors, including GGE, to a higher priority. As reported by Benjamin Hernandez at Bloomberg Law, U.S. Trustee Lisa L. Lambert objected to Higher Ground's proposal to roll up $2 million of existing debt to a higher tier of payment priority. Hearing is scheduled for September 3 for the case (Case No. 25-80121-11). But this whole story is about far more than business miscalculation followed by collapse. The implosion of HGE and Guidepost Montessori was sudden and left uncounted families adrift mid-year with no school for their children. CBS reported from Denver, where five Guidepost schools closed with no notice: "The teachers are so loving and caring. It's sad that my daughter isn't going to be with the teachers that she's come to know and trust," said Cait, whose daughter has been at Guidepost Montessori since she was 4 months old. "Now we're given four weeks to try to find that that same availability and also aligning with the values and the care that we want for our child." LoudonNow reported on a Guidepost school that closed so quickly that teacher and student belongings were still locked inside. Elena Tyng and her husband, both police officers, have two sons enrolled at the school and have been relying on family to help out while they look for other options. 'I got the email Wednesday but we were asleep and woke up to a text message about it from a friend and I was like, 'oh my god, what are we going to do?' she said. As reported by WTMJ in Milwaukee, parents at one Guidepost schools had at least a few weeks notice of the school's closing in March: "I'm frustrated, and I'm really angry," parent Monte Driscoll told TMJ4 News. 'They're taking advantage of families and children—families that are trying to do the best for their kids—and then putting them all in a frantic, frustrating situation.' Those events were repeated for around 140 schools. The collapse of Higher Ground Education may seem like a simple business story, but when businesses falter and fold in the education space, there are always students, parents, teachers, and families that are collatoral damage. If the plan finally wins approval, 2HourLearning will add to its growing set of edu-business holdings. Maris Mendes is now the U.S. CEO of Guidepost Global Education. The Girn's have launched a new school, 'A dream school. Handcrafted by pioneering educators. Nestled on four-and-a-half acres of gorgeous Texas Hill Country.' I have reached out on X to Girn for comment and will add it should he reply. The bankruptcy plan includes representation for the many stakeholders, foreign and domestic investors, the Girns, and the subsidiaries of HGE. It expresses a desire to preserve jobs and service for the seven remaining schools. But for the rest of Higher Ground Education's customers, it's already too late.
Daily Mail
11 hours ago
- Business
- Daily Mail
119 JCPenney stores face uncertain future after sale
JCPenney, the 123-year-old department store chain, is selling 119 stores to a private equity firm. Profits from the $947 million sale to Onyx, set to close on September 8, will be used to pay off debts. The 119 stores are spread across 35 states and Puerto Rico — with Texas having the most affected locations. Scroll down for the full list. Their future remains uncertain, though for now they remain open. JCPenney filed for bankruptcy protection in 2020, during which it shut 30 percent of its locations to take the total to 650. Earlier this year, it shut another seven stores — part of what experts say will be a wave of 15,000-store shutter this year. Major retail chains including Macy's, Party City, and Big Lots have cut stores in the past 18 months as shoppers shift online. JCPenney's decline accelerated during the pandemic but it had been the rise of online shopping that was the root of its problems. After filing for bankruptcy, its stores, warehouses and HQ were split across two companies. Mall owners Brookfield Asset Management and Simon Property Group took over the core JCPenney business and 490 of its stores. Copper Property, a trust formed by JCPenney lenders, took control of 160 stores and six distribution centers, including those in the 119-store sale. Beyond store closures, JCPenney is also cutting jobs by shutting down a warehouse in Texas, which employs around 300 people. 'The stores were sold as part of the bankruptcy agreement which stated real estate assets had to be sold off to help reimburse investors,' retail expert Neil Saunders of GlobalData told Daily Mail. In January, JCPenney announced it was merging with mall staples like Aéropostale, Brooks Brothers, and Eddie Bauer under a new umbrella called Catalyst Brands. The newly formed group is being led by JCPenney's former CEO Marc Rosen. Retail analysts told they're cautiously optimistic about the future of the retailer. 'JCPenney is midway through a reinvention,' Saunders added. 'There are some signs of success, but they're patchy. The challenge is pulling them together to drive growth.' JCPenney rival Macy's is shutting 150 stores by 2026, leaving only 350 locations left. Last year it shut the first 66 stores this year, including its iconic 51-year-old Massapequa store. Torrid, a once-popular plus-size fashion chain abruptly closed up to 180 stores following a massive sales decline. Meanwhile, Forever 21 ended its 41-year run after filing for bankruptcy twice in five years. JCPenney stores being sold Arkansas: The Mall at Turtle Creek, Jonesboro Shackleford Crossing, Little Rock Arizona: Arrowhead Towne Center, Glendale Superstition Springs Mall, Mesa Yuma Palms Regional Center, Yuma Palm Valley Cornerstone, Goodyear. California: Solano Town Center, Fairfield Westfield Plaza Bonita, National City Glendale Galleria, Glendale Huntington Park CBD, Huntington ParK Westfield Santa Anita, Arcadia Plaza at West Covina, West Covina Galleria at Tyler, Riverside Westfield Palm Desert, Palm Desert Westfield North County, Escondido The Shops at Montebello, Montebello Valley Plaza, Bakersfield Antelope Valley Mall, Palmdale Arden Fair Mall, Sacramento Brea Mall, Brea Pacific View Mall, Ventura Northridge Fashion Center, Northridge Imperial Valley Mall, El Centro Victoria Gardens, Rancho Cucamonga The Orchard at Slatten Ranch, Antioch. Colorado. Town Center at Aurora, Aurora First & Main Town Center, Colorado Springs Connecticut. The Shoppes at Buckland Hills, Manchester Westfarms Mall, Farmington Danbury Fair, Danbury Florida. Westfield Brandon, Brandon Westfield Countryside, Clearwater Westfield Broward, Plantation Pembroke Lakes Mall, Pembroke Pines The Mall at Wellington Green, Wellington Pier Park, Panama City Beach. Georgia. South Point S/C, Mcdonough Iowa. Coral Ridge Mall, Coralville Idaho. Boise Towne Square, Boise. Michigan: Oakland Mall, Troy Lakeside Mall, Sterling Heights Twelve Oaks Mall, Novi Grand Traverse Mall, Traverse City Rivertown Crossings, Grandville Waterside Marketplace, Chesterfield Township Minnesota: Rosedale S/C, Roseville Missouri: Mid Rivers Mall, St Peters The Plaza at Shoal Creek, Kansas City Mississippi: Southaven Towne Center, Southhaven North Carolina: The Streets at Southpoint, Durham. New Hampshire: The Mall at Rockingham Park, Salem New Jersey: Rockaway Townsquare, Rockaway Woodbridge Center, Woodbridge Newport Centre, Jersey City Freehold Raceway Mall, Freehold New Mexico: Coronado Center, Albuquerque Cottonwood Mall, Albuquerque. Nevada: Meadowood Mall, Reno Meadows Mall, Las Vegas Galleria at Sunset, Henderson New York: Gateway Shopping Center I & II, Brooklyn Staten Island Mall, Staten Island The Mall at Bay Plaza, Bronx Ohio: SouthPark Center, Strongsville The Mall at Tuttle Crossing, Dublin Polaris Fashion Place, Columbus The Shops at Fallen Timbers, Maumee Stone Creek Towne Center, Colerain Township Oklahoma: Center Owasso, Owasso Penn Square Mall, Oklahoma City Shops at Moore, Moore Oregon: Clackamas Town Center, Portland (Happy Valley) Pennsylvania: Westmoreland Mall, Greensburg The Mall at Robinson T/C, Pittsburgh High Pointe Commons, Harrisburg. Puerto Rico: Mayaguez Mall, Mayaguez Plaza Centro, Caguas Tennessee: Wolfchase Galleria, Memphis Stones River Mall, Murfreesboro. Texas: Mall Del Norte, Laredo Golden Triangle Mall, Denton Midland Park Mall, Midland Killeen Mall, Killeen Valle Vista Mall, Harlingen Post Oak Mall, College Station New Braunfels T/C at Creekside, New Braunfels The Parks at Arlington, Arlington Lakeline Mall, Cedar Park First Colony Mall, Sugarland Deerbrook Mall, Humble Sunrise Mall, Brownsville Baybrook Mall, Friendswood Fairmont Center, Pasadena Southpark Meadows S/C, Austin Alliance Town Center, Fort Worth Waxahachie Towne Center Crossing, Waxahachie El Mercado Plaza, El Paso Sherman Town Center, Sherman Teas Crossing, Conroe The Shops at Stone Park, Houston.
CNN
12 hours ago
- Business
- CNN
Small businesses helped build Musk's empire. Their unpaid bills add up to millions
When Jennifer Meissner's small pipe welding business landed a multimillion-dollar contract to help build a sprawling new Texas headquarters for Tesla, she was convinced it was her company's big break. Instead, she says the deal led her into personal and professional bankruptcy – unable to pay dozens of her workers at Christmastime. Meissner said that was her last resort after Tesla, which is owned by the world's richest man, stopped paying her company for work they'd already done. 'They just don't understand how many lives they completely trashed,' Meissner said. 'Working with a company as big as (Tesla) is, you trust the fact they are going to pay their bills.' As Musk has relied on small businesses to help him grow his multibillion-dollar empire, many contractors claim they were not paid – and at least two say they were forced into bankruptcy as a result, according to a CNN review of civil lawsuits and construction liens against companies including Tesla, SpaceX and X. Even an attorney representing the carmaker in Meissner's bankruptcy case acknowledged that Tesla has a habit of not promptly paying its bills. 'I don't disagree that it does take Tesla some time to pay,' the attorney said in court last year, adding 'that goes for legal bills, too … I know it full well.' In Texas, where Musk has been rapidly expanding operations, contractors have filed liens for more than $110 million against Tesla in the last five years, with more than $24 million still allegedly owed to dozens of businesses, CNN's analysis shows. Tesla, SpaceX and X did not respond to multiple requests for comment. Tesla has at times argued in court that it didn't pay contractors because of shoddy work or missed deadlines, but most disputes never made it that far. Those who claim they are owed money, many of them mom-and-pop businesses, say Musk's corporations often stall for months before paying invoices, if they pay at all. This can lead to a devastating ripple effect as interruptions to cash flow make it difficult for vendors to pay employees and keep operations running. Other big companies that launched major construction projects in the state have been subject to far fewer liens. Apple, for example, has roughly $1.2 million in unpaid liens in the counties where it hired contractors to build its headquarters — less than 10% of the amount owed by Tesla. Tesla's corporate strategy mirrors the ruthless cost-cutting approach Musk has become known for. At Twitter, now known as X, he slashed jobs and budgets after taking over and allegedly stopped paying rent. And as the one-time head of the Department of Government Efficiency, he ordered entire agencies shuttered with little regard to the effect on taxpayers or services, critics said. For the first seven years Meissner's company was in business, she prided herself on not once being late to pay her workers, she told CNN. After securing the business deal with Tesla in 2022, she said her company's annual revenue grew exponentially, and she hired even more employees. With business booming, she was also hopeful that she would finally be able to start setting aside money for her special needs daughter, whom she adopted at the age of seven. But after dedicating the entire work crew at Professional Process Piping to the project with Tesla for more than a year and investing her own money in expensive equipment, Meissner said Tesla abruptly stopped paying the company's invoices and more than $1 million in work went unpaid at the time. Her world was turned upside down in a matter of months, she said. She took out high-interest loans, and for the first time was unable to pay the workers who remained loyal to her despite the financial difficulties. She said she couldn't afford to sue Tesla to demand payment given the financial hole she was in, which affected her own finances as well because she had personally guaranteed a number of the business loans for rental trucks and other subcontractors. 'I know how it felt, living paycheck to paycheck and not being able to pay bills. I know. And I swore that having the company, I was never going to have my men not paid,' she said. 'And when that happened, that hit worse than anything else.' Tesla ultimately came to an agreement with Meissner in bankruptcy court, with its lawyer claiming in the settlement that the contractor had 'overbilled the project and provided substandard labor and services.' Tesla agreed to pay Professional Process Piping's subcontractors $650,000, but Meissner says she is still out hundreds of thousands of dollars and isn't sure if she'll ever recover financially. To create Tesla's 10-million-square-foot production hub outside of Austin, Texas – known as the Gigafactory – contractors were hired for demolition, plumbing, painting and even to install robots that help build the carmaker's vehicles, according to lien filings. Workers were also hired by SpaceX to run wiring and put in drywall, among a large number of other construction tasks, as the company expanded its Starlink facility in rural central Texas—dubbed 'Project Echo.' And when Musk completed a high-profile takeover of the social media company formerly known as Twitter, which he rebranded X, contractors provided services ranging from private jet flights to janitorial work. CNN reached out to more than 100 companies that filed liens and lawsuits against Musk-owned companies, but even those willing to speak with reporters were hesitant to go on the record – citing Musk's power, frequent use of non-disclosure agreements and history of retaliating against critics with lawsuits and public attacks. On their face, liens don't necessarily mean that a company has done anything wrong. There could be other factors at play in some cases – such as substandard work or a contractor failing to pay the subcontractors they hired. Liens can also be filed as a way to encourage businesses to pay more quickly. But experts interviewed by CNN said liens are a last resort for businesses still needing to be paid. And a large number of liens could indicate a company is 'notoriously bad at paying its contractors on time,' said Scott Wolfe Jr., a former attorney and founder of a company that analyzes construction liens. Some lienholders told CNN they still hoped to be paid for their work, while others said they had written off the losses and doubted they'd ever see the money they claim to be owed. They described how excitement about major contracts with the company eventually turned into financial crises and sleepless nights. One contractor even told CNN that he had been so excited to land a project with Tesla that he bought himself a brand-new Model X, which he says now only serves to remind him of the nightmare business deal. A number of contractors interviewed by CNN said they weren't surprised by this business practice, noting how it aligned with Musk's reputation for penny pinching and slashing budgets at all costs – caring more about his personal missions than the people who get hurt along the way. 'His goal is to run through everything now – he doesn't care what or who that impacts – to save the future of the world,' said one entrepreneur about his impression of Musk. He spoke with CNN anonymously and said he remains a fan of Musk but that Tesla has a reputation in Austin of leaving contractors desperate to get paid – noting that his company had to take out extra lines of credit while awaiting payment from Tesla. 'Tesla was probably one of the only companies we did business with where it just felt like they absolutely did not care about putting a company out of business.' Several contractors said that in retrospect they would have hired attorneys to review the complicated contracts they signed, which they said included provisions that made it easier for Tesla to refuse to pay them. Some companies have taken their complaints a step further and filed lawsuits instead of or in addition to liens. Sun Coast Resources, a Houston-based fuel supplier, alleged in a lawsuit from April that Tesla had refused to pay for nearly $2.7 million worth of fuel that it delivered for construction machinery at Tesla's Gigafactory. 'While Tesla has never denied receiving the fuel, Tesla has offered a myriad of procedural reasons it has not paid,' Sun Coast wrote in its lawsuit. 'Moreover, Tesla has had constant personnel turnover and passed Sun Coast off from person to person who only conjures up some new reason as to why Tesla has not paid.' This month, Sun Coast Resources asked the court that the case be closed, and an attorney for the company told CNN the case had been resolved. And in 2022, a small Austin-based company, Full Circle Technologies, said in court that it was forced to file bankruptcy when Tesla refused to pay for work it did supplying and installing security cameras and other equipment at the electric automaker's Gigafactory. In bankruptcy filings, Full Circle Technologies said Tesla owed it nearly $600,000 and that it was 'forced to take on short term high interest loans to bridge the gap between performing the work for Tesla and the payment for its services.' When a creditor began to levy the company's bank accounts, the company said it had no option but to file for bankruptcy. Tesla then made its own claim in the bankruptcy hearings, stating Full Circle actually owed the carmaker money for allegedly breaching its contract. The two companies ultimately settled, but Full Circle CEO Abheeshek Sharma told CNN that Tesla was released from its obligation without paying a cent. And when Full Circle wasn't paid, the company said it couldn't pay its subcontractors either. One of the subcontractors, Electra Link, filed its own lawsuit against Tesla in a last-ditch effort to get paid the roughly $128,000 it said it was owed for the cabling it installed at the Gigafactory. It said Tesla had 'ignored' its three written notices that it had not been paid and that Tesla 'refused' to make any payments – prompting Electra Link to file liens against Tesla. Tesla turned around and countersued the company, claiming its liens were fraudulent because the contractor had only notified Tesla of the debt, and not the LLC used by Tesla for the project. The lawsuit was ultimately settled. After Musk's high-profile purchase of Twitter in 2022, at least seven different businesses filed lawsuits for non-payment – all of which have since been resolved. 'Twitter responded with a campaign of extreme belt-tightening that amounted to requiring nearly everyone to whom it owes money to sue,' attorney Ethan Jacobs wrote about the company's alleged refusal to pay contractors including marketing and consulting firms. Another lawsuit cited emails saying that new management wanted to 'hold firm' about not paying the invoice for private jet transportation that had already been provided. Twitter claimed it told the jet operator that the services had not been approved by an authorized employee and therefore it was not responsible for the expense. Jacobs, who represented many of these companies in their litigation against the social media firm and said all of his cases settled, said he found it surprising that a businessman as powerful and high-profile as Musk would be brazen enough to have 'a practice of not paying people until they sue.' 'They were essentially saying that they just decided not to pay until they had to,' he said of X under Musk's leadership. 'It's not the way I have generally seen people doing business.' After Meissner of Professional Process Piping filed for bankruptcy, she said she liquidated all available retirement and savings accounts, sold land just to be able to afford an attorney and stopped sending her daughter to the ballroom dance lessons Meissner said had served as a form of therapy for her. Meissner said she now works two jobs and will be working to pay off her debts for a long time. She also still worries that she could lose her house or car. 'It's been horrible,' she said. 'If I didn't have my family, I don't think I would have made it.' While every billion-dollar business is going to encounter some level of dissatisfied contractors or subcontractors, Meissner said the large number of liens that have been filed against Tesla indicate to her that this is simply the way the billionaire operates his companies. 'When there are that many (liens), that looks like standard business to me, and that's shady,' she said, adding that she wants Musk to know just how many lives have been impacted by these practices. 'It's not just my company, it's all the companies that support you. You own that business – your name is on it.'
CNN
13 hours ago
- Business
- CNN
Small businesses helped build Musk's empire. Their unpaid bills add up to millions
When Jennifer Meissner's small pipe welding business landed a multimillion-dollar contract to help build a sprawling new Texas headquarters for Tesla, she was convinced it was her company's big break. Instead, she says the deal led her into personal and professional bankruptcy – unable to pay dozens of her workers at Christmastime. Meissner said that was her last resort after Tesla, which is owned by the world's richest man, stopped paying her company for work they'd already done. 'They just don't understand how many lives they completely trashed,' Meissner said. 'Working with a company as big as (Tesla) is, you trust the fact they are going to pay their bills.' As Musk has relied on small businesses to help him grow his multibillion-dollar empire, many contractors claim they were not paid – and at least two say they were forced into bankruptcy as a result, according to a CNN review of civil lawsuits and construction liens against companies including Tesla, SpaceX and X. Even an attorney representing the carmaker in Meissner's bankruptcy case acknowledged that Tesla has a habit of not promptly paying its bills. 'I don't disagree that it does take Tesla some time to pay,' the attorney said in court last year, adding 'that goes for legal bills, too … I know it full well.' In Texas, where Musk has been rapidly expanding operations, contractors have filed liens for more than $110 million against Tesla in the last five years, with more than $24 million still allegedly owed to dozens of businesses, CNN's analysis shows. Tesla, SpaceX and X did not respond to multiple requests for comment. Tesla has at times argued in court that it didn't pay contractors because of shoddy work or missed deadlines, but most disputes never made it that far. Those who claim they are owed money, many of them mom-and-pop businesses, say Musk's corporations often stall for months before paying invoices, if they pay at all. This can lead to a devastating ripple effect as interruptions to cash flow make it difficult for vendors to pay employees and keep operations running. Other big companies that launched major construction projects in the state have been subject to far fewer liens. Apple, for example, has roughly $1.2 million in unpaid liens in the counties where it hired contractors to build its headquarters — less than 10% of the amount owed by Tesla. Tesla's corporate strategy mirrors the ruthless cost-cutting approach Musk has become known for. At Twitter, now known as X, he slashed jobs and budgets after taking over and allegedly stopped paying rent. And as the one-time head of the Department of Government Efficiency, he ordered entire agencies shuttered with little regard to the effect on taxpayers or services, critics said. For the first seven years Meissner's company was in business, she prided herself on not once being late to pay her workers, she told CNN. After securing the business deal with Tesla in 2022, she said her company's annual revenue grew exponentially, and she hired even more employees. With business booming, she was also hopeful that she would finally be able to start setting aside money for her special needs daughter, whom she adopted at the age of seven. But after dedicating the entire work crew at Professional Process Piping to the project with Tesla for more than a year and investing her own money in expensive equipment, Meissner said Tesla abruptly stopped paying the company's invoices and more than $1 million in work went unpaid at the time. Her world was turned upside down in a matter of months, she said. She took out high-interest loans, and for the first time was unable to pay the workers who remained loyal to her despite the financial difficulties. She said she couldn't afford to sue Tesla to demand payment given the financial hole she was in, which affected her own finances as well because she had personally guaranteed a number of the business loans for rental trucks and other subcontractors. 'I know how it felt, living paycheck to paycheck and not being able to pay bills. I know. And I swore that having the company, I was never going to have my men not paid,' she said. 'And when that happened, that hit worse than anything else.' Tesla ultimately came to an agreement with Meissner in bankruptcy court, with its lawyer claiming in the settlement that the contractor had 'overbilled the project and provided substandard labor and services.' Tesla agreed to pay Professional Process Piping's subcontractors $650,000, but Meissner says she is still out hundreds of thousands of dollars and isn't sure if she'll ever recover financially. To create Tesla's 10-million-square-foot production hub outside of Austin, Texas – known as the Gigafactory – contractors were hired for demolition, plumbing, painting and even to install robots that help build the carmaker's vehicles, according to lien filings. Workers were also hired by SpaceX to run wiring and put in drywall, among a large number of other construction tasks, as the company expanded its Starlink facility in rural central Texas—dubbed 'Project Echo.' And when Musk completed a high-profile takeover of the social media company formerly known as Twitter, which he rebranded X, contractors provided services ranging from private jet flights to janitorial work. CNN reached out to more than 100 companies that filed liens and lawsuits against Musk-owned companies, but even those willing to speak with reporters were hesitant to go on the record – citing Musk's power, frequent use of non-disclosure agreements and history of retaliating against critics with lawsuits and public attacks. On their face, liens don't necessarily mean that a company has done anything wrong. There could be other factors at play in some cases – such as substandard work or a contractor failing to pay the subcontractors they hired. Liens can also be filed as a way to encourage businesses to pay more quickly. But experts interviewed by CNN said liens are a last resort for businesses still needing to be paid. And a large number of liens could indicate a company is 'notoriously bad at paying its contractors on time,' said Scott Wolfe Jr., a former attorney and founder of a company that analyzes construction liens. Some lienholders told CNN they still hoped to be paid for their work, while others said they had written off the losses and doubted they'd ever see the money they claim to be owed. They described how excitement about major contracts with the company eventually turned into financial crises and sleepless nights. One contractor even told CNN that he had been so excited to land a project with Tesla that he bought himself a brand-new Model X, which he says now only serves to remind him of the nightmare business deal. A number of contractors interviewed by CNN said they weren't surprised by this business practice, noting how it aligned with Musk's reputation for penny pinching and slashing budgets at all costs – caring more about his personal missions than the people who get hurt along the way. 'His goal is to run through everything now – he doesn't care what or who that impacts – to save the future of the world,' said one entrepreneur about his impression of Musk. He spoke with CNN anonymously and said he remains a fan of Musk but that Tesla has a reputation in Austin of leaving contractors desperate to get paid – noting that his company had to take out extra lines of credit while awaiting payment from Tesla. 'Tesla was probably one of the only companies we did business with where it just felt like they absolutely did not care about putting a company out of business.' Several contractors said that in retrospect they would have hired attorneys to review the complicated contracts they signed, which they said included provisions that made it easier for Tesla to refuse to pay them. Some companies have taken their complaints a step further and filed lawsuits instead of or in addition to liens. Sun Coast Resources, a Houston-based fuel supplier, alleged in a lawsuit from April that Tesla had refused to pay for nearly $2.7 million worth of fuel that it delivered for construction machinery at Tesla's Gigafactory. 'While Tesla has never denied receiving the fuel, Tesla has offered a myriad of procedural reasons it has not paid,' Sun Coast wrote in its lawsuit. 'Moreover, Tesla has had constant personnel turnover and passed Sun Coast off from person to person who only conjures up some new reason as to why Tesla has not paid.' This month, Sun Coast Resources asked the court that the case be closed, and an attorney for the company told CNN the case had been resolved. And in 2022, a small Austin-based company, Full Circle Technologies, said in court that it was forced to file bankruptcy when Tesla refused to pay for work it did supplying and installing security cameras and other equipment at the electric automaker's Gigafactory. In bankruptcy filings, Full Circle Technologies said Tesla owed it nearly $600,000 and that it was 'forced to take on short term high interest loans to bridge the gap between performing the work for Tesla and the payment for its services.' When a creditor began to levy the company's bank accounts, the company said it had no option but to file for bankruptcy. Tesla then made its own claim in the bankruptcy hearings, stating Full Circle actually owed the carmaker money for allegedly breaching its contract. The two companies ultimately settled, but Full Circle CEO Abheeshek Sharma told CNN that Tesla was released from its obligation without paying a cent. And when Full Circle wasn't paid, the company said it couldn't pay its subcontractors either. One of the subcontractors, Electra Link, filed its own lawsuit against Tesla in a last-ditch effort to get paid the roughly $128,000 it said it was owed for the cabling it installed at the Gigafactory. It said Tesla had 'ignored' its three written notices that it had not been paid and that Tesla 'refused' to make any payments – prompting Electra Link to file liens against Tesla. Tesla turned around and countersued the company, claiming its liens were fraudulent because the contractor had only notified Tesla of the debt, and not the LLC used by Tesla for the project. The lawsuit was ultimately settled. After Musk's high-profile purchase of Twitter in 2022, at least seven different businesses filed lawsuits for non-payment – all of which have since been resolved. 'Twitter responded with a campaign of extreme belt-tightening that amounted to requiring nearly everyone to whom it owes money to sue,' attorney Ethan Jacobs wrote about the company's alleged refusal to pay contractors including marketing and consulting firms. Another lawsuit cited emails saying that new management wanted to 'hold firm' about not paying the invoice for private jet transportation that had already been provided. Twitter claimed it told the jet operator that the services had not been approved by an authorized employee and therefore it was not responsible for the expense. Jacobs, who represented many of these companies in their litigation against the social media firm and said all of his cases settled, said he found it surprising that a businessman as powerful and high-profile as Musk would be brazen enough to have 'a practice of not paying people until they sue.' 'They were essentially saying that they just decided not to pay until they had to,' he said of X under Musk's leadership. 'It's not the way I have generally seen people doing business.' After Meissner of Professional Process Piping filed for bankruptcy, she said she liquidated all available retirement and savings accounts, sold land just to be able to afford an attorney and stopped sending her daughter to the ballroom dance lessons Meissner said had served as a form of therapy for her. Meissner said she now works two jobs and will be working to pay off her debts for a long time. She also still worries that she could lose her house or car. 'It's been horrible,' she said. 'If I didn't have my family, I don't think I would have made it.' While every billion-dollar business is going to encounter some level of dissatisfied contractors or subcontractors, Meissner said the large number of liens that have been filed against Tesla indicate to her that this is simply the way the billionaire operates his companies. 'When there are that many (liens), that looks like standard business to me, and that's shady,' she said, adding that she wants Musk to know just how many lives have been impacted by these practices. 'It's not just my company, it's all the companies that support you. You own that business – your name is on it.'
