APPOMATTOX — Virginia made progress Friday in its effort to recover grant money invested in a failed Chinese-led business venture in Appomattox.

Acting on a request from the Virginia Economic Development Partnership, a judge froze money from a foreclosure action against Lindenburg Industry LLC, which defaulted on a pledge to create 349 jobs and invest $113 million in a former furniture plant in Appomattox.

Appomattox County Circuit Court Judge Donald Blessing granted a preliminary injunction that freezes nearly $860,000 in the account of a real estate trustee until further litigation by the three parties haggling over the money: the state, Lindenburg Industry and the company’s site consultant, Charlotte, North Carolina-based Development Advisors Inc.

The state is seeking to recover $1.4 million in Governor’s Opportunity Fund money paid a year ago to Lindenburg for a project that never got off the ground.

“You’re under order now,” Blessing told trustee Robert Goad at the end of a 40-minute hearing Friday.

Goad conducted the Jan. 29 foreclosure sale of the former Thomasville furniture plant in Appomattox that Lindenburg bought for $2 million in 2014 but never occupied.

The sale generated $1 million. Development Advisors said it arranged for the foreclosure as part of a legally valid action to collect $859,485 in consulting fees.

That is “my client’s money,” said Neal Walton, an attorney for Development Advisors, asking the judge to deny the injunction and allow Goad to send the money to Development Advisors on Friday as planned. “It’s not VEDP’s money.”

The property was encumbered by several other liens, including by the town of Appomattox to recover municipal taxes and fees and by contractors who said they weren’t paid for improvements completed at the plant.

It was unclear whether Goad, who declined to comment, had paid any of those parties with foreclosure proceeds before Friday’s court hearing. Sandi McNinch, general counsel for the partnership, said Friday that she believed Goad still had the $859,485.

Development Advisors worked with partnership officials on the deal that led to the state grant. Gov. Terry McAuliffe appeared in Appomattox in November 2014 to announce the project, saying he’d “closed” the deal during a visit to Beijing in the previous month.

An investigation by The Roanoke Times found that state officials based their faith in the deal on a company website that featured false information, including the listing of a Winston-Salem, North Carolina, address where the company never had been located.

Partnership officials neither sought to verify the veracity of the information on the website nor obtained audited financial statements from the company. State Secretary of Commerce and Trade Maurice Jones has said those failures will be corrected in future deals.

The Roanoke Times’ findings triggered a wave of outrage in the General Assembly, where portions of the story were read from the House floor.

Against that backdrop, the state has continued what Jones has conceded is an “uphill battle” to recover the $1.4 million granted to Lindenburg.

With a looming March deadline to return the money, Lindenburg told state officials last month the company does not intend to repay, the partnership said. Virginia went to court on the theory that Lindenburg is insolvent and the partnership is a creditor with a claim on the company’s assets.

That shifts attention to the plant where Lindenburg touted plans to manufacture catalytic converters.

Development Advisors obtained a priority lien, recorded with Lindenburg’s consent, against the site, according to court records. Nonetheless, partnership officials say the money from the sale belongs to the state.

The plant was auctioned off in December. Moneta developer George Aznavorian recently closed his purchase of the property.

Seeking to claim most of Aznavorian’s payment, Virginia officials also said Lindenburg believes Development Advisors “has not adequately performed its obligations to Lindenburg Industry,” the state said in court papers. Lindenburg’s chief asset is its claim that it does not owe Development Advisors the $859,485, the state said.

Partnership attorney Alan Wingfield told the judge he didn’t want to detail evidence against Development Advisors because he knew reporters were present and some of his words might be “scurrilous.”

Lindenburg lawyer Robin Wood said the company did not oppose the judge freezing the funds.

Walton said the partnership’s action was akin to a hospital seeking to collect a patient’s unpaid medical bills by suing the mortgage bank that foreclosed on the patient’s home. “Doesn’t work that way,” Walton said.

Walton told the judge that Development Advisors has development opportunities in which it would like to invest the money. At a minimum, Development Advisors could earn interest, but when Blessing asked for the interest rate Walton said the return wouldn’t be significant.

Blessing said he was satisfied to a sufficient degree that Virginia has “equity” at stake, likely would win the case and would be harmed if Goad paid the $859,485 to Development Advisors.

The case, which began with a late-afternoon filing Thursday by the partnership, was adjourned for the day without the parties setting a future hearing date.

On the House floor Friday, Del. Matthew Fariss, R-Campbell County, who represents Appomattox County, said he commended McAuliffe, Jones and their staff “for all the hard work on this awful misfortune that affected so many people in my district and the taxpayers from all over the state.”

Staff writer Alicia Petska contributed to this report.

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Jeff Sturgeon covers business, banking, transportation and federal court. Phone: (540) 981-3251. Email: jeff.sturgeon@roanoke.com. Mail: 201 W. Campbell Ave., Roanoke, VA 24011.

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