Last year, Castleton revealed a plan to boost its finances by selling its Ohio operations for $2.6 million, including $2 million in cash.

Jay McLamb, then Castleton's chief financial officer, promised to invest $600,000 in the business, contingent on completing the Ohio sale and the state granting Castleton a license.

The Ohio sale went through, but it netted Castleton only about $1 million in cash, with the remainder included in a promissory note. The state Insurance Department said that wasn't enough to stabilize the company's finances. At a hearing in October, David W. Boone, the assistant attorney general who represented the Insurance Department, said Castleton had $6.3 million in assets and $12.5 million in liabilities.

"If you melted down all of the assets, you do not have the money to pay all the liabilities that is shown on Castleton's own financial statement," Boone said.

Castleton contended that it had millions of dollars worth of good will, an intangible that doesn't show up on financial statements that reflect the value of factors such as its reputation. That, Castleton insisted, made the company solvent.

At an October hearing, Castleton's president, Suzanne Clifton, testified that she and her husband would personally guarantee Castleton's debts in the event of a default.

Clifton testified that their combined net worth was in the neighborhood of $20 million. Castleton subsequently filed a document putting the couple's net worth at $15.4 million. That included $27.8 million in assets, including houses in Wrightsville Beach and Florida valued at $4.5 million each and ownership stakes in Castleton and two other businesses valued at $12.1 million, minus $12.4 million in liabilities.

The proposal unraveled in November when Castleton notified the Insurance Department that it owed the Internal Revenue Service millions in unpaid payroll taxes. The company blamed McLamb and fired him. Castleton then tried to postpone the upcoming hearing, but the request was denied.

The next day, Castleton was denied a license and ordered to halt operations.

"The audited ... financial statements presented at the hearing show that the Castleton Group is insolvent," the Insurance Department ruled. "To allow Castleton Group to continue to operate as a ... [professional employer organization] in North Carolina would be contrary to the best interests of North Carolina consumers."

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