TransTec plc owes its creditors more than 129 million ($203 million), according to the administrative receivers who took over the bankrupt automotive parts supplier in December. The joint receivers, three partners in accounting firm Arthur Andersen's Manchester, England, office, added that they are negotiating with buyers for the company's plastic molding and metal part subsidiaries.
"Discussions with parties interested in acquiring the businesses of the plastics division are continuing," Arthur Andersen announced in a brief statement.
The receiver already has sold five of TransTec's controls equipment units.
TransTec is based in Birmingham, England. The company's plastics division includes an assortment of plastics and rubber processing and packaging machinery firms in Scotland, England and Wales.
In their latest statement, the TransTec administrators referred to the circumstances that eventually led the group into receivership.
Much of the blame for the downfall of the company was placed on the difficult situation in the automotive market earlier in 1999, including "the cancellation at short notice of production schedules for key customers."
"In addition, the plastics division had suffered from a major downturn in activity levels as a result of reduced [United Kingdom] demand together with the effect of the strength of sterling."
Arthur Andersen added that it is at an early stage of examining accounting irregularities at the company. These were revealed in December, when two senior TransTec directors resigned following a failure to disclose an $18 million claim by Ford Motor Co. prior to 1998.
That disclosure led to the collapse of refinancing talks with lender banks, which forced TransTec into bankruptcy.
TransTec's troubles have been headline news in Britain, because the company was founded by Geoffrey Robinson, a controversial British Labour member of Parliament and former government minister. He was chairman until May 1997.
Meanwhile, 30 TransTec creditors recently attended an advisory workshop on the mechanics of insolvency set up by the Birmingham Chamber of Commerce.
"Several small companies will be heavily affected by TransTec," said local insolvency expert John Wheatley, who gave the workshop.
He expects more suppliers will be hit hard following the sale of parts of the group. Wheatley warned that resolution of the company's affairs will be a long drawn-out matter taking one or two years, since the collapse is being investigated by independent inspectors appointed by the government's Trade and Industry Ministry.
