TORONTO - Creditors owed C$9.1 million (US$6.8 million) may get a chance to decide the fate of recycler Resource Plastics Inc. by Nov. 27. The Brantford, Ontario, polyethylene film and bottle recycler currently is protected from creditors while it seeks a strategic buyer to help it restructure. Its debts include about C$7 million (US$5.2 million) owed to secured creditors and about C$2.1 million (US$1.6 million) due to scrap plastic suppliers, equipment dealers and a host of other unsecured creditors.
Resource has until late November to present a restructuring plan to creditors, unless it gets a court extension for the deadline. If creditors turn down the proposal, Resource would be declared bankrupt, explained Wes Treleaven, a partner for Resource trustee Deloitte & Touche Inc. of Toronto.
Resource announced Sept. 29 that it is seeking a buyer. Fifteen days earlier it notified the court that it planned to file a proposal to restructure under Part III of Canada's Bankruptcy and Insolvency Act, which is similar to Chapter 11 of the U.S. Bankruptcy Code.
The company did not disclose it was in bankruptcy protection when it announced it was seeking a buyer. Officials were unavailable to comment on the omission, which irritated several unsecured creditors.
Treleaven said Resource continues to run at a high rate and several potential buyers are studying its books.
Creditors had mixed reactions to Resource freezing its accounts on Sept. 14 to give it ``breathing room'' while it attempts to restructure.
An Exchange Plastics Corp. official said the recycling industry suffers when one of its players doesn't pay its bills.
``The problem is, everyone gets suspicious,'' said Mel Temple, whose Akron, Ohio, firm isowed US$4,788.52 by Resource.
Temple said in a telephone interview he expects unsecured materials suppliers ``won't get anything'' from Resource.
Nathan Seskin, owner of New Age Plastic Recyclers Inc. of Pompano Beach, Fla., said that the recycling market changes quickly and getting stuck with unpaid bills ``has happened to us many times before.''
``One can do credit checks but a [customer] can do anything at any time,'' Seskin said.
New Age is owed US$2,419.35 for film scrap it shipped to Resource Plastics.
More than 20 other materials suppliers, including JAM Plastics Grinding Inc. of Buffalo, N.Y., Mobil Chemical Co. of Pittsford, N.Y., and several municipalities are on Resource Plastics' unsecured creditors' list.
Erema North America Inc. of Topsfield, Mass., is owed US$34,909 for recycling equipment but continues to do business with Resource to help keep it going, according to Tim Hanrahan, vice president of sales and marketing.
``[Resource] paid a big price for their learning curve but they are a good company for the right buyer,'' said Hanrahan, who estimated in a telephone interview that Resource has about C$8 million (US$6 million) in ``state of the art'' equipment. ``We have been working with them from their startup in 1989.''
Hanrahan said the recycling market is tough, with materials prices recently falling 25 percent after a steep rise when virgin resin prices were strong.
Resource's secured creditors include Royal Bank of Canada and other financial institutions and several shareholders.
One Resource competitor complained that the firm is in precarious financial straits after using government aid to compete against un-assisted firms.
``[Resource is] a thorn in recyclers' side,'' said Chris Thew, a sales representative for Canadian Recycling Corp. of Brampton, Ontario.
Ontario's Ministry of the Environment provided financial assistance to Resource Plastics when the company joined the province's curbside collection program.
Resource Plastics'secured creditors include Federal Business Development Bank, a federal Crown corporation owed about C$1.7 million (US$1.3 million).