CCIDA accepts land as payment toward Cosmetic Specialty Labs debt

Comanche County Industrial Development Authority has reached a compromise that will give it partial repayment for a loan made to a former Lawton business.

The action gives CCIDA ownership of two lots, worth an estimated $35,000, as payment toward the $215,000 that Cosmetic Specialty Labs still owes from a 2016 loan. Cosmetic Speciality Lab President and Chief Executive Officer Jennifer Ellis said in early 2024 that the family business, founded by her late grandmother, would close after 51 years.

The firm had received a $282,000 loan from CCIDA in March 2016, funds Ellis said would be used to buy a second tube-filling machine and support equipment to fill orders for two specific clients, one moving to Lawton from India. The equipment was expected to double production and require an additional seven to 12 new employees. Under the terms of the original agreement, the loan was to be repaid through credits for additional jobs.

But, Ellis said in March 2024 that the plant had not been making a profit for years, adding the family decision to close the plant was a direct result of the COVID-19 pandemic and its dramatic effect on American manufacturing. Coupled with higher costs across the board, Ellis said it had become difficult to produce a high enough profit margin.

CCIDA members have voted twice to extend repayment of the loan for six months, most recently in October (a time frame that expires this month). Officials said in October they expected to be able to sell the plant in south Lawton, which had been listed at $2.9 million, enough to pay the bank lien on the property and CCIDA.

Officials said last week that isn’t expected to happen, prompting CCIDA to accept a proposal that would convey it ownership of two tracts of land, valued at a total of $35,000.

Local attorney Blake Dutcher said CCIDA is in the second mortgage position on the plant site, behind the bank that holds the lien — City National Bank. That bank would be the first entity paid if and when that plant site is sold. That process could be coming soon, Dutcher said, noting the plant is going to a sheriff’s sale for payment of back taxes. Dutcher and Mike Mayhall, attorney for CCIDA, said the authority would realize proceeds from the sheriff’s sale only if the property sells for more than what is owed the bank, meaning there is no guarantee there will be any money left over to apply toward CCIDA’s loan.

The recommendation members accepted was to take ownership of two pieces of property: a site in Big Rock in Medicine Park, valued at $30,000; and a smaller tract in Lawton, valued at $5,000.

Dutcher said there is a chance the $35,000 is all that CCIDA will get out of the now-defunct Cosmetic Specialty Labs. He said while there is no guarantee CCIDA will realize any money from the sale of the main plant, taking ownership of the property guarantees $35,000.

What remains from the sale of the old plant would have to satisfy taxes, then City National Bank’s lien before any could be applied to CCIDA’s debt, attorneys said. If there are no excess funds there, “we’re done,” Dutcher said, adding the deal is probably the best CCIDA can expect.

“It enables us to get the matter settled more quickly,” he said. “The only assets they have are those two properties.”

Going through the judgment process with the plant would delay disbursement of any potential funds until 2026, he said.