STAMFORD, CONN. (Aug. 16, 7:15 p.m. EDT) — An online trader bought the remaining products of bankrupt Zeta Consumer Products Corp. and Tucker Housewares, reselling many of them a few days later to a discount-store chain that owns Hudson´s Dirt Cheap.
The asset sale essentially closes the door — in an unusual fashion — on the two consumer-products processors, once prominent makers of trash bags and plastic housewares.
"We do have somewhat of a novel business model," said Stuart Kessler, chief operating officer of Stamford-based iSolve Corp., the dot-com that purchased Zeta and Tucker´s assets. "We´re very active in understanding what´s going on in the distressed-asset community."
Zeta, the owner of Tucker, filed April 25 for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Newark, N.J. The court later ordered the liquidation of the company´s assets, managed through major creditor GE Capital.
Tucker at one time was considered the third-largest U.S. plastics housewares supplier selling to large discounters. In 1996, the company was bought by Zeta, the consumer products division of Sigma Plastics Group in Lyndhurst, N.J.
Together, Zeta and Tucker recorded annual sales totaling about $125 million.
Sigma owner Alfred Teo, who had been Zeta´s acting president, washed his hands of the financially distressed company earlier this year.
Teo blamed the companies´ demise on pressures imposed by discount-store mammoths Kmart Corp. and Wal-Mart Stores Inc. to squeeze profit margins to the bare bone.
"There´s no future in the housewares business with those 3,000-pound gorillas," said Teo, who added that he lost about $28 million in the companies. "We´re not going near that kind of business again."
The court ordered the companies´ assets disposed by auction to pay off creditors, said Randal Blosio, vice president of strategic alliances at iSolve.
The online trading company paid $625,000 for the entire product inventory Aug. 10, Blosio said. ISolve was the high bidder.
Those products included garbage, kitchen and leaf bags and plastic cutlery, cups and dishes, Blosio said.
The inventory came from closed Zeta and Tucker plants in Macomb, Ill.; Leominster, Mass.; Arlington, Texas; and Kingman, Ariz., and were sold in nine lots.
ISolve immediately offered the products for auction on its Web site, www.isolve.com. By Aug. 15, all but 5 percent of the products had been sold to outside retailers and distributors, Kessler said. The rest is expected to be sold by the end of this week, he added.
Deep-discount chain Hudson Salvage Inc. of Hattiesburg, Miss., purchased 35-40 percent of the inventory, said Bill Hudson Jr., chief executive officer of the chain. The company operates retail stores in the South under the names Hudson´s Treasure Hunt and Hudson´s Dirt Cheap.
"To compete with the large chains, we have to look to buy products in creative, unique situations," Hudson said. "Working through an online company can help us find our products at a lower price."
ISolve, which launched its Web site in March, plans to do more work with plastics processors, Kessler said. Besides buying products from financially distressed companies, ISolve also sells overstocked, damaged and salvaged goods on its auction site.
The company has no relationship with GE Capital, also based in Stamford. Instead, iSolve learned of the court-ordered auction by following the bankruptcy case, Kessler said. GE Capital officials were unavailable for comment.
ISolve guarantees that it will buy inventory that does not sell within 30 days. That proposition makes it attractive to company liquidators, Kessler said.
"The great majority of our customers are just normal, well-run businesses that for whatever reason want to sell surplus assets," Kessler said. "But we also look to maximize the return to creditors or investors."