by Kevin Kelley, Vermont Business Magazine A South Burlington plastics manufacturer that filed for bankruptcy protection October 20 is planning to sell its assets to a giant competitor.
Atlanta-based Consolidated Container Company (CCC), which employs 2,200 workers at 54 US plants, has tentatively agreed to purchase Shelburne Plastics, which has 68 employees in Vermont and three other states.
Shelburne Plastics last reported annual revenues to Vermont Business Magazine for 2011 of $22 million, which ranked it number 86 in VBM’s Vermont 100. In its voluntary chapter 11 bankruptcy filing, it listed assets of $1,000,001 to $10 million and liabilities of $10,000,001 to $50 million.
Raymond Obuchowski, a Bethel attorney representing Shelburne Plastics in federal bankruptcy court, said the sale for an undisclosed sum could close in early December. The deal with CCC is contingent on whether a higher bidder emerges at an auction scheduled for mid-November, Obuchowski noted. The plan to salvage Shelburne Plastics' operations must also be approved by the Rutland-based US bankruptcy court for Vermont.
‘Shelburne has a very good reputation in the marketplace for service, quality and doing business the right way," CCC President Jeffrey Greene commented. "We’re excited to merge Shelburne’s operations and skilled workforce with CCC’s."
The 35-year-old Vermont manufacturer of plastic packaging and bottles intends to continue running its plants during the sale process. Company owner Eugene Torvend said the bankruptcy filing and pending sale "are necessary next steps to continue long term supply to Shelburne’s customers.’
In a court document, Torvend said his company lost a "staggering" $2.4 million last year. That led to the firing of the firm's chief financial officer, chief operating officer and controller. Torvend said in the court filing that he had handed over financial and strategic decision-making authority to the CFO and COO in 2010 "due to personal reasons."
"Poor business decisions" made by those officers "drew substantial cash out of the business and resulted in escalating operating losses," Torvend recounted. Subsequent efforts to find new capital were unsuccessful. Shelburne then retained a Wall Street advisor to find a buyer for the business. In addition, "an experienced and well qualified CFO" had been hired as "the company planned for a new future," Torvend said.
But in late September, Shelburne Plastics tumbled into "a cash crisis," Torvend added, with the company having exhausted all its credit. The filing under Chapter 11 of the federal bankruptcy law came a few weeks later.
New Hampshire-based Centrix Bank & Trust, which is owed about $3.6 million, ranks as Shelburne's largest secured creditor. The IRS has a $939,000 lien on Shelburne's assets, and the Business Finance Authority of New Hampshire is owed about $674,000.
More than $3 million is due to the company's unsecured creditors. Torvend's filing says these debts mainly take the form of operational lease liabilities and money owed to businesses in the trade. The 294 total creditors also include the Vermont Department of Taxes.
Shelburne Plastics describes itself on the company's website as "the second largest blow molding manufacturer in the Northeast."
The firm, which operates plants in New York, Maryland and New Hampshire as well as Vermont, says it is "large enough to keep cost competitive" while also being "small enough to offer our customers a unique customer care experience."
Assets:
$1,104,786.59 accounts receivable
Equipment $1,330, 000.00 including $530,000 in Vermont and $800,000 in NH, liquidation appraisal
$658,000.00 inventory
Liabilities include:
Business Finance in NH $674,449.40
Centrix in NH $3,607,208.70
Grenier in NH $51,356.48
IRS $939,071.98
IRS (payroll taxes) $957,371.78
Vermont Dept of Taxes $15,291.65
Blue Cross/Blue Shield of Vermont $12,662.19
Gmh Transportation Services, Wilmington, VT $47,259.64
Comptroller in Maryland $47,996.34
Maryland Dept of Labor $14,075.18
Complete Labor & Staffing, Londonderry, NH $118,237.30
Diamond Staffing Service, NYC $83,146.81
Air Molded Product Corp $24,286.88
Allstar Dairy Assoc, Cincinnatti, OH (resin) $977,104.46
Borden Dairy Co, Dallas, TX $416,088.80
Byrne Dairy, Inc, Lafayette, NY (bottles) $17,369.53
Dantrode BV, Netherlands (resin) $1,014,392.75
Cigna Healthcare, Hartford, CT $45,580.88
Cardmember Services, Wilmington, DE $115,241.30
Vermont filing is case number 13-10729
Shelburne Plastics files for bankruptcy, plans to sell assets
Submitted by tim
on