The Sept. 15 bankruptcy filing by two plastic parts subsidiaries of automotive supplier JPE Inc. should serve as a chilling reminder of the itchy trigger fingers of some financial institutions.
In JPE's case, the company had assurances that five banks would provide a revolving credit line while JPE tried to turn around the underperforming companies it had purchased.
But after a summer-long strike at General Motors Corp. left those plants less than profitable, creditors pulled the plug and howled like wolves at the door for debt repayment.
That bank backtracking forced the resignation of JPE Chairman John Psarouthakis, who said he no longer could contribute while creditors demanded their money.
And it handed JPE's two divisions—Plastic Trim Inc. and Starboard Industries Inc.—no choice but to file for Chapter 11 protection.
Remember that old Business 101 lesson? Never take your company too far into debt. Or it could come back to bite you.