Polycel Structural Foam Inc. of Somerville, N.J., plans to reorganize, thwarting an attempt by creditors to liquidate the company.
The company filed Dec. 14 for protection under Chapter 11 of the U.S. Bankruptcy Code. Three creditors petitioned Nov. 7 to have the firm placed in Chapter 7 bankruptcy.
"While the decision to file was a difficult one, we determined that Chapter 11 provides the most expeditious means to achieve a successful financial and operational restructuring of our business," Polycel President Glenn Gray said in a news release.
He attributed the filing to increased competition and deteriorating margins from higher raw material costs.
U.S. Bankruptcy Court in Lexington, Ky., entered an order converting the case from Chapter 7 to Chapter 11, approved interim financing from Polycel senior lender Bank of America NA and authorized transfer of the case to bankruptcy court in Trenton, N.J.
The financing enables the structural foam molder to purchase goods and service and pay post-petition employee wages, services and benefits.
"We are pleased with the court's prompt approval of our request regarding a post-petition loan," Gray said.
Polycel employs about 350 and continues manufacturing operations in Somerville and Branchburg, N.J.; Liberty Center, Ohio; and Winchester, Ky. Polycel had sales of $42.4 million for the 11 months ended Nov. 30.
Polycel's audited financial report of Dec. 31, 1999, said it had assets of about $24.6 million and liabilities of $37.9 million.
Cincinnati lawyer Ronald E. Gold represents Polycel.
The petitioning creditors were Enclosure Dynamics Inc. of Roxbury, N.Y.; metal stamper G & W Products Inc. of Fairfield, Ohio; and leasing agent Vojecaro Properties LLC of Winchester.