LEGAL ACTION COMES AS NO ANNOUNCEMENTS YET THAT ARC HAS BEEN BOUGHT OUT BY ANY COMPANY SINCE ANNOUNCED FEBRUARY 4 DEAL DEADLINE.
FEBRUARY 12, 2026 – written by WADE QUEEN
A second financial company has now filed suit against Kentucky’s largest addiction treatment provider, alleging default on a loan.
Clear Cove Opportunities Fund filed a complaint against Louisa-based Addiction Recovery Care on Monday, February 9, in Manhattan (New York City) federal court.
Last month, Angelica Capital Trust filed suit, alleging that they had advanced ARC $5.4 million, with the agreement that ARC would turn over $8.1 million in anticipated tax refunds, when they arrived. Instead, Angelica Capital Trust says ARC kept the money when it arrived.
Now, Clear Cove says ARC did the same thing to them. And in a motion to intervene previously filed in Angelica’s case, Clear Cove claims ARC sold the same tax credits to both companies.
No hearings have yet been set in the Clear Cove case.
ARC had become one of Louisa’s largest employers and bought or leased several city properties. The company spent money on endeavors in town including a school, a welding training facility and was a key contributor to the Garden Theater and MOMO.
Last month, U.S. District Judge George Benjamin Daniels ordered ARC to place $4.7 million into a frozen bank account, leaving the company $1 million to pay necessary expenses until an expected sale of the company on February 4. Since that time, there have been no announcements that the company has been sold.
A copy of the Clear Cove complaint follows below:
Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 1 of 10
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK CLEAR COVE OPPORTUNITIES FUND I LLC, Plaintiff, v. ADDICTION RECOVERY CARE LLC, and TIM ROBINSON, Defendants. No. _______________ COMPLAINT 1. Plaintiff Clear Cove Opportunities Fund I LLC (“Clear Cove”), by its undersigned attorneys, for its Complaint against defendants Addiction Recovery Care LLC (“ARC”) and Tim Robinson (“Robinson” and, collectively with ARC, the “Defendants”), alleges as follows: NATURE OF THE ACTION 2. Clear Cove is an investor that, inter alia, purchases the right to receive Employee Retention Credit (“ERC”) tax refunds from businesses that are due such ERC refunds and in need of immediate liquidity. 3. ARC operates residential and outpatient drug rehabilitation facilities in Kentucky and offers behavioral healthcare and medical healthcare services to patients. 4. Clear Cove purchased from ARC the right to receive all ERC refunds due to ARC for the first quarter of 2021 (the “Transferred Interests”). 5. Subsequently, Clear Cove obtained from ARC a secondary interest in the ERC refunds due to ARC for the second quarter of 2021 (the “Secondary ERC Claim”). 6. As a result of Clear Cove’s acquisition of the Transferred Interests and Secondary ERC claim, ARC is required to transfer to Clear Cove whichever of (a) the Transferred Interests Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 1 of 10 2 or (b) the Secondary ERC Claim (up to the amount of the Transferred Interests) ARC first receives from the Internal Revenue Service (“IRS”). 7. On or around December 2, 2025, ARC received the ERC refunds for both the first and second quarter of 2021. 8. However—despite the fact that two months have now elapsed—ARC has never forwarded Clear Cove’s property to it. THE PARTIES 9. Plaintiff Clear Cove is a limited liability company organized under the laws of the State of New York with an office and principal place of business in New York County. 10. The members of Clear Cove—and/or the ultimate members of its member LLCs— are citizens of the following states and territories: Arizona, California, Delaware, Florida, New Jersey and Puerto Rico. 11. On information and belief, Defendant ARC is a Kentucky limited liability company, headquartered in Louisa, Kentucky. 12. On information and belief, ARC has only two members: Tim Rob inson and nonparty Lelia Robinson. 13. On information and belief, Tim Robinson and Lelia Robinson are both citizens of the Commonwealth of Kentucky and reside in Kentucky. JUIRSDICTION AND VENUE 14. For purposes of diversity jurisdiction, Clear Cove is a citizen of Arizona, California, Delaware, Florida, New Jersey and Puerto Rico, while ARC and Robinson are citizens of Kentucky. Accordingly, this Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(1) in that this is a civil action between citizens of different states, and the amount in controversy exceeds $75,000, exclusive of interest and costs. Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 2 of 10 3 15. This Court possesses personal jurisdiction over Defendants because: (a) they have purposefully directed their activities at the Southern District of New York, including by transacting business in New York with a New York limited liability company; and (b) the litigation arises out of or relates to those activities. 16. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2), because: (a) a substantial part of the events or omissions giving rise to Clear Cove’s claim(s) occurred within this District; and (b) a substantial part of the property that is the subject of this action is situated within this District. 1 FACTS 17. On July 18, 2025, Clear Cove and ARC entered into a True Sale Risk Participation of ERC Claim Agreement (the “Participation Agreement”). 18. A true and complete copy of the Participation Agreement is included at Exhibit 1 hereto. 19. The Participation Agreement governed the sale of “Transferred Interests” by ARC to Clear Cove, which encompassed: …all of [ARC’s] rights to receive any and all payments, interest, proceeds or distributions of any kind form the United States Internal Revenue Service (the “IRS”) in respect of the employee retention credits duly and timely claimed by [ARC] on account of qualified wages paid by [ARC] and identified as a “Claim for Refund” under 1 The Participation Agreement (Participation Agreement § 12) and Guaranty (defined infra, § 5.4) purport to designate the United States District Court for the Southern District of Florida (or, alternatively, any court of the State of Florida sitting in Broward County) as having exclusive jurisdiction over actions “arising out of or relating to” each agreement. However, neither venue provision is enforceable because neither agreement satisfies the requirements of Florida Statute Section 685.101(2)(a). Specifically, Neither agreement bears a substantial or reasonable relation to Florida, no individual party is a resident or citizen of Florida, and no entity party is organized under Florida law or maintains a place of business in Florida. Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 3 of 10 4 Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund for the first quarter of 2021 filed with the IRS . . . in the aggregate amount of $3,319,220.80 . . . as set forth in line item 27 of Part 3 thereof. (Participation Agreement § 1(a).) 20. The Participation Agreement also entitled Clear Cove to receive 50% of any interest paid by the IRS with respect to the ERC refund. (Participation Agreement § 6(d).) 21. The Participation Agreement obligated ARC to transfer to Clear Cove the Transferred Interests and certain supporting documentation “promptly but in no event later than three (3) business days after the date on which [ARC] receives such Distribution.” (Participation Agreement § 6(a).) 22. A “Distribution” is defined as “any payment or other distribution of cash (including IRS interest or proceeds) by check or by the use of electronic transfer payable to [ARC] as the taxpayer from the IRS but which Transferred Interests have been sold to [Clear Cove] in respect of the Transferred Interests, whether prior to or after the Effective Date, from the Tax Refund Claim.” (Participation Agreement § 1(b).) 23. The failure to timely pay the Transferred Interests initiates the accrual of interest on the amount of the Distribution at the rate of 15% per annum from the date on which ARC received the Distribution to the day the Transferred Interests are paid to Clear Cove. (Participation Agreement § 6(a).)
24. Also on July 18, 2025, Clear Cove and Robinson entered into a “Payment and Performance Guaranty” (the “Guaranty”). 25. A true and complete copy of the Guaranty is included at Exhibit 1 hereto. 26. Pursuant to the Guaranty, Robinson “unconditionally and irrevocably guarantees to [Clear Cove], and its successors and assigns the due and punctual payment and performance of all Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 4 of 10 5 obligations of ARC under the Risk Participation Agreement (the “Obligations”), in each case when and as the same shall become due, including, without limitation, those found in Section 7 thereof.” (Guaranty § 2.1(a).) 27. Robinson further acknowledged that “The value of the consideration received and to be received by Guarantor [Robinson] as a result of ARC consummating the Purchase Transaction [as memorialized by the Participation Agreement] is substantial and Guarantor is directly and indirectly benefitted by ARC consummating the Purchase Transaction (Guaranty § 2.1(b)(ii)). 28. On July 22, 2025, Clear Cove paid to ARC $2,721,761.06 in consideration for the Transferred interests, as specified by the Participation Agreement. 29. The Participation Agreement required ARC to fulfill certain obligations within sixty days following its execution. (Participation Agreement § 7.) 30. On September 24, 2025, ARC negotiated the Amendment to ERC Risk Participation Agreement (“Amendment”) to obtain an additional thirty days to fulfill those obligations. 31. A true and complete copy of the Amendment is annexed as Exhibit 2 hereto. 32. In consideration for Clear Cove’s forbearance, ARC granted to Clear Cove a right to receive payments, interest, proceeds, or distributions in the ERC refund due for the second quarter of 2021—the Secondary ERC Claim—for purposes of satisfying ARC’s obligation to forward the Q1 ERC refund in the event that ARC first received the Q2 refund: . . . in the event [ARC] shall receive any payment or other distribution of cash (including IRS interest or proceeds) by check or by credit from the IRS in respect of the Secondary ERC Claim (“Secondary Distribution”), and such Secondary Distribution occurs prior to the Distribution [of the Transferred Interests], [ARC] shall be required to satisfy any and all obligations set forth herein with Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 5 of 10 6 respect to the Distribution, Transferred Interests and Tax Refund Claim out of the proceeds [ARC] receives with respect to the Secondary Distribution. (Amendment §§ 2(d), 5.) 33. The Amendment otherwise treated the Secondary ERC Claim as part of the Transferred Interests, and applied “all provisions of the Original Agreement . . . equally to the Secondary ERC Claim, including . . . [the] Distributions/Guaranteed Obligations of Seller.” (Amendment § 2(a).) 34. The “Distributions/Guaranteed Obligations of Seller” section of the Participation Agreement includes the requirements, discussed above, to pay the Transferred Interests out of any Distributions within three days of receipt, imposes the 15% per annum interest rate on late payments, and includes the guaranty from Robinson for payment to Clear Cove. (Participation Agreement §§ 6(a), 6(c).) 35. Robinson executed the Amendment both on behalf of ARC and on behalf of himself as Guarantor. 36. On or around December 2, 2025, ARC received the ERC refunds for both the first and second quarter of 2021. 37. Despite the fact that more than two months have now elapsed, ARC has never forwarded Clear Cove’s property—the Transferred Interests or the Secondary ERC Claim—to it. 38. Robinson has not made payment to Clear Cove in satisfaction of ARC’s obligations under the Participation Agreement and Amendment.
FIRST CAUSE OF ACTION (Against ARC) (Breach of Contract – Participation Agreement and Amendment) 39. Clear Cove repeats and realleges as if fully set forth herein Paragraphs 1 through 38 of this pleading. 40. Clear Cove and ARC are parties to the Participation Agreement, as amended by the Amendment. 41. Pursuant to the Participation Agreement, Clear Cove purchased from ARC a 100% participation interest in ARC’s rights to receive any and all Distributions received from the IRS in connection with the Transferred Interests, in the aggregate amount of $3,319.220.80, plus 50% of the interest paid by the IRS on the ERC tax refund. 42. Pursuant to the Amendment, and in consideration for Clear Cove’s forbearance, ARC granted to Clear Cove the Secondary ERC Claim (a secondary interest in the ERC refunds due to ARC for the second quarter of 2021). 43. At all relevant times Clear Cove has comp lied with and performed all of its applicable contractual obligations. 44. On or around December 2, 2025, ARC received the ERC refunds for the first quarter of 2021 and the second quarter of 2021. 45. ARC breached the Participation Agreement and Amendment by failing to forward either (a) the Transferred Interests or (b) the Secondary ERC Claim (up to the amount of the Transferred Interests) to Clear Cove. 46. Because ARC failed to forward (a) the Transferred Interests or (b) the Secondary ERC Claim (up to the amount of the Transferred Interests) to Clear Cove, the Transferred Interests are subject to interest at the rate of 15% per annum. Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 7 of 10 8 47. Accordingly, Clear Cove has suffered damages in an amount to be determined at trial. SECOND CAUSE OF ACTION (Against Tim Robinson) (Breach of Contract – Guaranty) 48. Clear Cove repeats and realleges as if fully set forth herein Paragraphs 1 through 47 of this pleading. 49. Robinson, as guarantor, personally guaranteed ARC’s obligations under the Participation Agreement and Amendment, including its obligation to remit (a) the Transferred Interests or (b) the Secondary ERC Claim (up to the amount of the Transferred Interests) to Clear Cove. 50. The Guaranty is a valid and binding contract between Clear Cove and Robinson. 51. Clear Cove fully performed under the Guaranty. 52. Robinson breached the Guaranty by failing to ensure due and punctual performance by ARC or, alternatively, to make Clear Cove whole following ARC’s failure of performance. 53. Robinson’s obligations to Clear Cove are derivative of ARC’s obligations and therefore are subject to interest at the rate of 15% per annum. 54. Accordingly, Clear Cove has suffered damages in an amount to be determined at trial. Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 8 of 10 9 THIRD CAUSE OF ACTION (Against ARC and Robinson; pleaded in the alternative to First and Second Causes of Action) (Unjust Enrichment) 55. Clear Cove repeats and realleges as if fully set forth herein Paragraphs 1 through 38 of this pleading. 56. In the event the Court finds that the Participation Agreement, the Amendment and/or the Guaranty do not constitute valid and enforceable contracts between Clear Cove and ARC/Robinson, Clear Cove pleads this Third Cause of Action for unjust enrichment in the alternative to the First and Second Causes of Action. 57. Clear Cove paid ARC valuable consideration in exchange for the right to receive any and all distributions relating to the Transferred Interests that ARC received from the IRS. 58. Robinson acknowledged the significant direct benefit he derived from that consideration. 59. Defendants have failed and refused to remit to Clear Cove the ERC refunds owed in accordance with the Participation Agreement and Amendment. 60. Having failed to remit to Clear Cove the ERC refunds due and owing under the Participation Agreement and Amendment, ARC/Robinson have been unjustly enriched by their wrongful retention and continued possession and control of the Transferred Interests, to Clear Cove’s detriment. 61. As a result of Defendants’ actions as set forth above, Clear Cove has been damaged in an amount to be determined at trial.
Case 1:26-cv-01083-UA Document 1 Filed 02/09/26 Page 10 of 10
DEMAND FOR RELIEF WHEREFORE, Plaintiff Clear Cove Opportunities Fund I LLC prays that judgment be entered in its favor and against Defendants Addiction Recovery Care LLC and Tim Robinson, on the First and Second Causes of Action of the Complaint respectively or, alternatively, on the Third Cause of Action of the Complaint, and that Clear Cove be awarded and the Court direct: (a) Compensatory damages in the full amount of all liability and actual damages arising out of Defendants’ conduct, in amounts to be ascertained at trial, but in no event less than $3,617,838.15; (b) All incidental and consequential damages; (c) An award of interest at the rate of 15%, pursuant to Section 6(a) of the Participation Agreement; (d) An award of costs and attorneys’ fees, pursuant to Section 4.4 of the Guaranty; and (e) Such other and further relief as the Court deems just and proper. Dated: New York, New York February 9, 2026 Respectfully submitted, VEDDER PRICE P.C. By: /s/ Daniel C. Green Mitchell D. Cohen mcohen@vedder.com Daniel C. Green dgreen@vedder.com 1633 Broadway, 31st Floor New York, New York 10019 T: +1 212 407 7700 Attorneys for Plaintiff Clear Cove Opportunities Fund I LLC
