In a swift, but complicated, exchange, Putnam Precision Molding Inc. has taken control of Danco Plastock Inc.'s custom molding operations. Danco of Putnam, Conn., filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on April 24 to shield the operation against a $1.5 million liability claim that would have killed it, according to Donn L. Hartley, Danco's president and owner.
``There's no way the company could take on a $1.5 million liability and hope to ever survive,'' Hartley said in a recent telephone interview.
Under its new name and new owner, the plant is making prod-ucts and meeting its contracts, according to Roland Toutant, Putnam Precision's owner and president.
Toutant had been leasing the 60,000-square-foot plant, which sits on 7 acres, to Danco. He also owned the lien on its 28 presses and other auxiliary equipment.
The lawsuit jeopardized the bank's position with Danco's collateral, Hartley said. When the bank foreclosed on Danco, so did Toutant. But he chose to keep the company intact. So, he bought the molder's inventory - raw materials and product - from the bank.
``I'm solid,'' Toutant said. ``I'm trying to make everybody comfortable. So far, we haven't lost a customer.''
The company's business is about 80 percent custom molding; its proprietary Plastock line of mechanical gears, pulleys and bells makes up the rest. Sales were about $6.7 million for its 1994 fiscal year, which ended June 30.
It custom molds parts for the automotive, computer, telecommunications, electronic and aerospace industries. Secondary services include toolmaking and assembly. The company also is working on ISO 9002 certification, according to a news release.
U.S. District Court in Newark, N.J., ruled Nov. 11 that Danco, as a successor of the former Plastimatic Inc., must assume that company's $1.5 million debt to Glynwed International plc of Birmingham, England.
Plastimatic, which folded in 1992, owed Glynwed the money for back rent and a broken lease agreement for a facility in Fairfield, N.J.
Glynwed, which once had owned the injection molder, was primary tenant for the lease, and eventually settled the debt with the plant's landlord for approximately $600,000, according to Hartley.
The British firm sold Plastimatic in December 1989. Plastimatic closed its Fairfield operation in 1991, when it merged with Danco Products Inc. of Putnam, Conn.; both those firms failed in 1992.
Hartley was among the group of shareholders who bought the assets of Plastimatic and Danco Products in a public auction in June 1992.
Out of those assets, Danco Plastock was formed. Last year Hartley bought out the other shareholders to become the company's sole owner.
Hartley disagrees with the Newark federal judge's ruling that Danco Plastock is Plastimatic's successor.
However, he said, he tried to negotiate a settlement with Glynwed, even offering it equity in his company.
``They wanted to kill the company,'' he said. ``They're out of pocket $600,000. They wanted notes on all assets for $1.5 million.''
But ``Putnam is up and running,'' he said. ``For our customers and employees, it was a relatively transparent transaction.''
Hartley said Danco has filed a suit to get Glynwed's lien thrown out. But his company will not re-emerge as an operating entity.
``We will liquidate whatever's left,'' he said.
Toutant owns a number of firms in the eastern United States; Putnam Precision is his only plastics concern. But he said he is looking to build the firm through more work - its presses are not running at full capacity-and possibly through acquisition. He said he has no connections to Danco Plastock's trouble and is ``keeping an arm's length'' from the affair.
``That ain't my doing,'' he said.
Hartley said Danco filed Chapter 11 to keep Glynwed from moving into a secured creditor position, ahead of other priority claims - primarily his liabilities to employees for wages, benefits and vacations.
Danco fired all 87 employees, who then were rehired by Putnam under a renegotiated union contract, a changeover that ``took three days, tops,'' Toutant said. Hartley is not an employee of Putnam Precision.