By: Michael Lauzon
April 2, 2013
CLEVELAND -- Defunct custom injection molder Core Systems LLC's major assets have been purchased by plant and machinery liquidator Perfection Industrial Sales of Elk Grove, Ill.
Cleveland lawyer Thomas Coffey of Tucker Ellis LLP represented the secured creditor in the auction held April 2. Coffey said in an April 2 telephone interview that Perfection Industrial paid $4.33 million for the equipment in Core Systems' Painesville, Ohio, facility and $1.8 million for the Mount Gilead, Ohio, plant and equipment. The Painesville building itself was not part of the auction since it has been leased.
"We see a small window to put Ohio jobs back to work," Perfection Industrial principal Adam Stevenson said by phone the day after the auction. "The used machinery market is stronger because of lack of supply. Ohio is a good place to do molding."
Stevenson said it is too early to comment on interested buyers for the former Core Systems assets but he believes there is a chance for the Mount Gilead plant and equipment to be sold as one parcel to an existing molder. Equipment at the Painesville plant might be sold in lots. Such sales could occur soon since the Painesville plant is leased and there is more urgency to wrap up the molding operation's fate.
Perfection Industrial of Elk Grove Village, Ill., is a liquidator for a range of industries, including plastics. Its business encompasses offshore deals and equipment placements for OEMs, Stevenson said. It will deal in equipment and real estate and conducts some bids online. The firm has more than 48 years of experience.
Core Systems shut the Ohio plants down after major customer and appliance titan Whirlpool Corp. pulled its business, claiming the Ohio molder did not live up to agreed-on performance improvement targets. Whirlpool went to court to force Core Systems to give up the Whirlpool molds. Major customers for the plants included GE Appliances. Stevenson said he is not aware of either appliance company wanting to buy assets to keep molding alive in Mount Gilead or Painesville.
The secured creditor for the sale was Extrusion Acquisition LLC, a subsidiary of private equity firm Special Opportunity Value Fund of Chicago. Extrusion Acquisition was an ad hoc company formed to buy the stakes of former Core Systems secured creditors Fargo Bank and J.P. Morgan. Coffey said the auction sale was conducted under state law, Coffey's specialty. Federal laws often govern bankruptcy proceedings but state laws can apply under some circumstances, such as UCC, or Uniform Commercial Codes.
"There's a good chance Mount Gilead will be sold lock, stock and barrel as a continuing concern," Coffey said. Painesville's assets could be sold piece-meal. Coffey said the plastics machinery market is recovering and the assets probably will find good, productive homes.
The Painesville operation was Core Systems' headquarters plant with 61 injection presses with clamp forces of 60-720 tons. Mount Gilead houses 24 presses with clamping forces up to 1,000 tons.
Coffey said there was a lot of interest in both operations prior to and during the auction. Stevenson said interest remains high.