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Unsecured creditors of Urethane Technologies Inc.'s Polymer Development Laboratories Inc. filed an involuntary Chapter 7 liquidation petition against the company March 10 in U.S. Bankruptcy Court in Santa Ana, Calif.

The action came about a week after UTI shut down operations at PDL's Orange, Calif., plant when a deal to bring an investor into the struggling business fell through. PDL's unsecured creditors filed the petition to protect their debt, according to James Orefice, UTI president and chief executive officer.

Finova Capital Corp., UTI's secured lender, began aggressively collecting on its loan about three months ago, he said. Finova's action left the UTI unit with no cash flow to operate the business and the California firm's unsecured creditors out in the cold, Orefice said.

``In October, we were almost $3 million in debt [to Finova]. Last week, we were about $1 million,'' he said. ``It made it very difficult to keep things running.''

Calls to Finova were not returned.

By filing the Chapter 7, the unsecured creditors now have some leverage, Orefice said. The bankruptcy court will decide by March 30 whether to throw out the filing or appoint a trustee to operate the financial dealings to the benefit of the creditors.

The Orange facility's last day of operation was either March 3 or 4, according to the factory's former plant manager, who asked that his name not be used. He said the unit employed 27 or 28 when it closed.

Publicly held UTI made its proprietary PU systems at the Orange plant for applications such as roofing insulation, building panels and skate wheels.

The end of operations came about 10 days after an announced deal with New York investment firm Endeavour Capital Corp. fell through. The deal would have given Endeavour 80 percent of UTI in exchange for $1.5 million.

Despite the Chapter 7 filing, Orefice remained optimistic, saying that if the court allows the filing to stick, UTI could start over with a clean slate.

Orefice said he has talked with several firms about purchasing UTI. One would buy the assets and restructure it into a private business. Another expressed interest in buying the ``assetless UTI shell'' to give the purchasing company a stock market position.

Operations also have been rocky at UTI's Brin-Mont business in Greensboro, N.C. UTI bought the chemical supplier in March 1996 in an effort to keep down rising raw material costs.

The firm's lender, Sirrom Capital Corp., repossessed and foreclosed on Brin-Mont's assets on Feb. 28. Sirrom, though, continued the unit's operations under its subsidiary, SWS 3 Inc.

UTI, publicly traded on Nasdaq, was formed in 1985 and has suffered financial difficulties since its inception. Besides the Endeavour deal, a proposed merger with the IPI Division of PMC Inc. fell through last October.

For the nine-month period ended last Sept. 30, UTI posted a net loss of $3.34 million and reported a working capital deficit of $3.88 million.