Lawyers for Keysor-Century Corp. say the firm plans to operate as usual after filing for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
The Saugus, Calif.-based PVC resin maker and compounder submitted a voluntary petition March 18 in U.S. Bankruptcy Court in San Fernando, Calif. The company said it defaulted on loan agreements with Congress Financial Corp., its primary lender.
``This isn't one of those companies that's melting down,'' Hamid Rafatjoo, one of Keysor's bankruptcy lawyers, said in a March 22 telephone interview. ``It's more of a lender problem. Now we've entered into an agreement with them for cash collateral to keep funding operations.''
The default on an $8 million loan stems from two events: the death of Keysor President Howard Hill last year and the company's problems with the government over environmental issues, said Brad Godshall, another lawyer for Keysor. Hill had guaranteed some of the company's debt.
Keysor is under federal investigation for allegedly falsifying pollution emissions data and records of exposing workers to hazardous chemicals. Just a few weeks ago the FBI and environmental officials searched Keysor offices. Some of the allegations are felonies and carry criminal penalties.
In a separate investigation, California's Division of Occupational Safety and Health proposed $218,825 in fines against Keysor after its testing revealed worker exposure up to 22 times the legal limit. In a March 25 telephone interview, state spokeswoman Susan Gard said Keysor has appealed those citations.
Filing Chapter 11 puts Keysor ``in a better [cash] position now than we were before,'' Godshall said.
Family-owned Keysor has the court's permission to maintain benefits and keep pay current for the firm's 128 employees, Rafatjoo said. According to court documents, Keysor owes nearly $3.7 million to its 20 largest unsecured creditors and estimates funds will be available to pay creditors. Court documents did not reveal exact assets, but provided a range of $10 million to $50 million, with the same range estimated for debt. Lawyers said the firm had 2001 sales of more than $50 million.
Godshall said the company wants to restructure on a consensual basis. The firm is negotiating with Congress Financial, working to resolve the environmental issues and forming a creditors committee.
``We hope to get those issues resolved in the next three or four months'' and file an emergence plan, he said.
Keysor produces PVC resins for the flooring and packaging markets in Saugus. The firm also operates a compounding facility in Newark, Del.