This story has been updated since its original publication to clarify that Thinkstream Acquisition purchased Thinkstream’s assets.
First NBC Bank’s troubled lending practices may have extended to Thinkstream, a Baton Rouge law enforcement software firm founded by Barry Bellue that was forced into bankruptcy in 2015 and its assets snatched up by another local tech company.
Papers filed in a civil lawsuit in Orleans Parish District Court allege that prior to Thinkstream’s forced bankruptcy, the recently failed bank continued lending more money to the company and to Bellue personally—even as both were in default on existing loans and were insolvent—in a likely effort to artificially keep the loans current by paying itself interest as the earlier loans became due.
Those allegations were made by Thinkstream Acquisition, the company founded in December 2015 by J. Smith Thomas to buy Thinkstream’s assets, which operates as Kologik. Thomas is the owner of BIG Networks, a Baton Rouge tech firm that provides IT services. Thinkstream, which provided software to hundreds of local, state and federal law enforcement agencies in Louisiana and other states, was forced into bankruptcy in May 2015 with an estimated $21 million in debt. In its deal to acquire the firm’s assets, Thinkstream Acquisition purchased all First NBC claims against the original Thinkstream, which by then had ballooned to $4.9 million.
But in September 2016, Thinkstream Acquisition filed suit against First NBC, alleging the bank had failed to live up to its obligations under the arrangement and had breached its fiduciary duties. The tech firm claims, among other things, that First NBC sold it letters of credit that had expired and certificates of deposit that weren’t in its possession, took control of securities brokerage accounts in the names of Bellue and his son, and kept the proceeds of the sale of collateral—including two lots in the Zee Zee Gardens area—that were intended to pay down the principal on the original loans on which Thinkstream and Bellue had defaulted.
Court papers also allege that First NBC holds a second deed of trust on hundreds of acres of land Bellue owns in Mississippi, but has allowed Bellue to continue owning the property while his loans are in default rather than foreclosing on it.
“As a result of the failures and breaches of contract by First NBC,” Thinkstream Acquisitions attorney Robert Rooth writes, “Thinkstream LLC is unable to determine whether the interest the bank is charging … is based on the correct balance due.”
Thinkstream Acquisition is asking a judge to enforce the purchase agreement, claiming that it is paying interest on an inflated principal balance, and has been forced to maintain $500,000 in escrow that could be available for other business purposes.
The case has dragged out in district court for months as First NBC failed to comply with orders to produce records for discovery. It moved to New Orleans federal court on May 11, after the FDIC declared First NBC a failed bank and took over.