By: Michael Lauzon
June 13, 2012
MIAMI, OKLA. (June 13, 10:15 a.m. ET) — Plastic fuel-can molder Blitz USA Inc. will shut operations after unsuccessfully trying to reorganize under Chapter 11 bankruptcy protection since Nov. 9, according to a company statement issued June 12.
The July 31 shutdown will affect 117 employees at Blitz’s manufacturing plant in Miami, Okla.
The firm plans to liquidate all assets either en masse or piecemeal, external affairs manager Amanda Emerson said in a telephone interview.
“We appreciate the support of our employees and their families in their efforts to reorganize and develop a viable business plan,” said Blitz President Rocky Flick, according to an article in the Joplin (Missouri) Globe. “Unfortunately, we were not able to address the costs of the increased litigation associated with our fuel-containment products.”
In April, Blitz sold its F3Brands LLC business, a major in oil drains and other associated auto products, in a bankruptcy auction sale to Hopkins Manufacturing Corp. of Emporia, Kan. Court documents stated Blitz netted $14.6 million from the sale, which it applied to secured debt.
Blitz has been facing a storm of lawsuits blaming its products for consumer injuries caused by fires. The firm spent some $30 million defending itself in product liability suits and owes $3.5 million in legal fees, Blitz reported in court documents.
Blitz’s decision to sell its assets is subject to approval by bankruptcy court. It sought Chapter 11 protection in Delaware. Wal-Mart Stores Inc., a major retailer of Blitz gas cans, also faces lawsuits.
Blitz has been the dominant producer of plastic gas cans in the United States and claimed 75 percent of the market.
“Other manufacturers face similar uncertainty — putting the industry’s ability to meet the typical spike in demand driven by storms in serious jeopardy,” Blitz stated in a news release.
In the week of June 4 the Portable Fuel Container Manufacturers Association began alerting consumers in hurricane-prone states of a potential product shortage, which increases public safety risk. In times of disaster, consumers rely on portable fuel supplies to operate electricity generators, vehicles, chain saws and other relief equipment.
PFCMA’s legal office is in Sacramento, Calif.
PFCMA has said congressional intervention is needed to stabilize the business environment so PFCMA group members can continue supplying the products necessary for safely transporting and storing gasoline and diesel fuel.
“While it is now too late to save Blitz, adoption of mandatory safety standards could convince others to invest in expanded operations,” the Blitz news release stated.
PFCMA has criticized the U.S. Consumer Products Safety Commission for twice refusing to mandate fuel-can safety standards because it claims that harmful incidences were the result of misuse of the fuel cans rather than a product issue.
Fuel-can producers have adopted voluntarily standards developed by the American Society for Testing and Materials since the 1980s. The standards include container stability and heat resistance, openings and closings, filling and pouring, drop strength, permeability and cautionary labeling.
Labeling, for example, states that gasoline should never be used to start or accelerate a fire. Much litigation resulted from such misuse of the fuel in the containers.
U.S. consumers buy more than 15 million portable fuel cans each year, but that number rises by 30 percent when hurricanes make landfall.
“If gas cans aren’t available, disaster victims will still be transporting and storing fuel, but at much greater risk to themselves and everyone around them,” Blitz stated.
Blitz President and CEO Rocky Flick said the sale process for the Miami assets could take three months.
Other PFCMA members include Midwest Can Co. of Melrose Park, Ill.; No-Spill Inc. of Lenexa, Kan.; Scepter Corp. of Scarborough, Ontario; and the Plastics Group Inc. of Willowbrook, Ill.
“Blitz was very good at what they did,” said Tom Cray, president of No-Spill. “The legal system is what brought them down. Blitz exported around the world and only here [in the United States] were there lawsuits.”