The state of Wisconsin may recover a large part of a $750,000 loan made to a failing injection molder in Gov. Tommy Thompson's hometown, after the company's new owners signed an agreement on Dec. 14 outlining repayment. Larry Ormson, a friend of Thompson's and former president of Royal Plastics Inc. in Elroy, Wis., received the loan in 1992 from the state Department of Development. At the time the company was named Northern Plastics.
But the company earlier this year was forced into bankruptcy, causing a modest scandal in state political circles. Ormson headed an investment group that included the governor's sister and other Thompson business associates.
The new company is called Tailor Made Products Inc. One of the new owners, Larry Glass, said Tailor Made took over 19 presses with clamping forces ranging from 100 to 1,000 tons, used primarily to manufacture housewares and cooking utensils. It employs 70.
Glass co-owns custom moldmaker Strohwig Tool and Die, in Richfield, Wis., which has annual sales of $17 million and employs 150. Strohwig has two presses in-house that it uses to make samples, Glass said. The sample presses are ``part of the reason we bought Royal Plastics. Our customers urged us to get into the molding business,'' Glass said.
The state expects Tailor Made to pay about $600,000 out of the $690,000 loaned to it to keep Northern Plastics afloat. The city of Elroy, a partner in the loan, will receive about $25,000 of its $60,000 invested in the loan.
Part of the new company's settlement with the state includes a $16,000 payment to the investment group in exchange for a plastics mold. There is also a $15,000 royalty payment to a company controlled by Ormson's brother.
The company also must raise its total number of employees to 90 after two years. Another provision requires Tailor Made to remain in the vicinity of Elroy for at least 10 years.
There are about 200 unsecured creditors owed about $600,000, according to the bankruptcy file.
Ormson sold the company before it declared bankruptcy to Madison, Wis., attorney David Grams, who has been sued by the state to recover damages.
``Wisconsin is exploring a variety of other options to insure that it is made whole,'' said Thomas H. Taylor, an assistant state attorney general.
Royal Plastics was pushed into bankruptcy on April 18, when creditors forced the company into involuntary liquidation under Chapter 7 of the U.S. Bankruptcy Code, Taylor said.
The company on May 3 filed for Chapter 11 voluntary reorganization, and the firm has been operating under a trustee's supervision since July 1. It has turned a profit since that time, Taylor said.
Before the November gubernatorial election, political opponent State Sen. Chuck Chvala tried to tie Thompson to the loan through a series of televised political ads naming Ormson. Ormson filed a defamation suit against Chvala, contending the ads citing the loan placed him in a ``false light.'' Thompson won re-election, and the lawsuit, in Juneau County Circuit Court, was dismissed.
Thompson, who has been mentioned in Republican circles as a potential candidate for higher office, has denied any involvement in the decision to grant the original loan.
