APPOMATTOX, Va. — State officials in Virginia have lost a key ruling in a lawsuit seeking to recover tax money spent on a failed project led by Chinese entrepreneurs.

A judge ruled against the Virginia Economic Development Partnership Friday. The partnership sued following the 2015 collapse of Lindenburg Industry LLC’s plans to build a catalytic converter plant in Appomattox.

Gov. Terry McAuliffe approved a grant of $1.4 million in taxpayer money to the Chinese company. The economic development agency alleged that Development Advisors, a site consultant, breached its obligation to Lindenburg and owed Virginia money.

A judge rejected that argument. The ruling would remove Development Advisors from the case, leaving only Lindenburg to face a possible legal challenge for the money.

An attorney for the state agency said no decision has been made on whether to appeal.

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