When Charley Smith took a hard fall last year, robbing him of his ability to walk unassisted, his wife Kathy Smith made it a priority to make their Elk River, Minnesota, home safer. 

They trusted home remodeler Minnesota Rusco with a $10,000 deposit, tasking them with making their shower bigger and installing handrails for Charley Smith to hold on to. 

The couple have no idea where their money is after Minnesota Rusco's abrupt closure in October. A Chapter 7 bankruptcy filing all but ensures that the Smiths and other customers won't see a refund, at least not directly from the company. 

"It's just gut wrenching," Kathy Smith said. "You have to save a long time to save $10,000 or more." 

The company, founded in 1955, was sold by its former Minnesota owners to Texas-based Renovo Home Services. Renovo, Minnesota Rusco and about 15 other companies have combined debts of somewhere between $100 million and $500 million, according to court filings. Those figures dwarf the estimated assets, listed in the range of $1 million to $10 million. 

According to Wesley Scott, managing partner with bankruptcy firm LifeBack Law Firm, it's unlikely that customers and local subcontractors will get any of their money back from Rusco directly. They're considered unsecured creditors, and when assets are liquidated and divided under Chapter 7 bankruptcy, the unsecured creditors are the last to receive any kind of payment. 

"The reverberations that will come from this bankruptcy filing are going to be enormous," Scott said. "When one entity cannot pay you and you don't get paid, that reverberates. There will be other bankruptcy filings because of this." 

While Charley Smith comes downstairs using a mechanical chair lift, Kathy Smith can only look in dismay at the three holes drilled into the side of the shower. It's the only evidence that there was anything done in exchange for the $10,000 deposit. 

They certainly aren't alone. WCCO identified at least 10 people who have filed claims against Rusco since the company closed in late October, including Debbie Brown in Cottage Grove. She said that she used part of her mother's inheritance to put a deposit on a new front door for her home, leaving her out about $10,800. 

"That stings that that's probably gone. I don't think I'm going to see any of it," Brown said. 

Both Brown and the Smiths filed those claims in hopes that they will be paid out by the state of Minnesota. The state's department of labor and industry has established a contractor recovery fund to assist consumers who may have become victims of contractor scams or other similar situations. The 2024 annual report on the fund shows that there were $5.52 million worth of approved claims last year against 61 contractors. 

Spokesperson for the Minnesota Attorney General's Office John Stiles said that the office intends to participate in the creditor's hearing scheduled for December 12, 2025. The office has a series of recommendations for impacted Minnesotans, listed below:

• "Keep and preserve copies of all contracts, invoices, receipts and written communications with Minnesota Rusco, which may be important to future efforts to get your money back;•    If you paid for undelivered services using a credit card, contact your credit card company and request a chargeback.  You may be asked to submit documentation in support of your chargeback request;
• If you paid for undelivered services by entering into a financing agreement arranged by Minnesota Rusco, check to see if the agreement includes a statement similar to the following:  'Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof.  Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.'  This language is required by a federal regulation, known as the 'Holder Rule,' and may help you stop making payments on the loan and even get a refund of payments already made.  Even if you believe the Holder Rule applies, be cautious about stopping payment to a creditor to avoid any collections proceedings or negative credit reporting.  More information about the Holder Rule and how consumers can use it is available from the Office here;
• File a complaint with the Minnesota Attorney General's Office.  We can help provide consumers with additional information about their rights, help mediate disputes with their credit card or financing companies, as well as keep them informed about the latest developments in Minnesota Rusco's bankruptcy proceeding, but we need to hear from them in order to do so;
• Because Minnesota Rusco is licensed by the Minnesota Department of Labor and Industry (DLI) as a residential remodeler, consumers harmed by Minnesota Rusco's closure are eligible for reimbursement from DLI's Contractor Recovery Fund.  The fund, however, can only pay up to $550,000 on behalf of one licensed entity and consumers must obtain a final judgment against Minnesota Rusco either via a successful lawsuit or settlement agreement in order to be eligible to submit an application to the fund.  The Office is currently reviewing how Minnesota Rusco's bankruptcy filings impact consumers ability to access DLI's Contractor Recovery Fund and intend to provide further guidance to impacted consumers in the near future; and
• While there is currently no deadline for consumers to file a claim in Minnesota Rusco's bankruptcy proceedings, consumers should monitor their mail for a notice informing them of their right to do so in the future.  The Office will also continue to monitor and participate in the bankruptcy proceeding and make consumers aware of their rights, including any future claim deadlines."