A judge overseeing the StyleMaster Inc. bankruptcy has set a date - April 19 - for the auction sale of the embattled Chicago housewares molder.
Now a Chicago firm, High Ridge Partners, is contacting prospective buyers of all or part of the business.
U.S. Bankruptcy Judge Jack Schmetterer will oversee the auction in his Chicago courtroom. Schmetterer approved the fast-track sale for StyleMaster during a hearing April 2. Lawyers said it appears that two potential roadblocks should not stop the April 19 auction - a dispute over liens on Sandretto injection presses and an attempt by custom molder Matrix IV Inc. to force StyleMaster into liquidation.
Matrix IV, burned by StyleMaster for about $7 million, is the only unsecured creditor that still opposes the auction sale, said Richard Lauter, lawyer for the molder in Woodstock, Ill.
Lauter said Matrix IV is in its own battle with StyleMaster's main lender, American National Bank and Trust Co., over liens on some molds held by Matrix. The auction will go forward without those molds, lawyers said.
The case began March 18, when StyleMaster filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. For three weeks, the action was fast-paced, but now events appear to be slowing down as investment groups and competing plastic housewares companies decide whether to bid for StyleMaster's assets.
The firm, owned by Martha Williams and other investors, blamed its financial crisis on the January bankruptcy filing by Kmart Corp. The retail giant accounted for about half of StyleMaster's sales.
In other developments at the April 2 hearing, Schmetterer said he would not appoint a bankruptcy trustee for the Chapter 11 case. Matrix IV wanted a trustee to serve as an independent authority to study StyleMaster's books. Trustees normally are appointed only in Chapter 7 liquidation cases.
Matrix officials have charged that StyleMaster was mismanaged - a charge denied by Williams, who hopes to buy back StyleMaster during the auction.
The drama highlights the financial woes of StyleMaster and Williams, its charismatic founder who rose through the ranks at Chicago-area plastics factories to end up owning her own company. StyleMaster went through bankruptcy liquidation in the early 1990s, but Williams found investors and bought the business back, initially outsourcing the molding.
Now she wants to buy the company again, including the machines, to retain StyleMaster as an ongoing business at its Chicago South Side factory, which opened last year with great fanfare. Williams said she has secured financing, through Chicago's LaSalle National Bank. The company employs 133.
At the upcoming auction, Williams and her shareholders will make an initial offer for the company, according to StyleMaster lawyer Michael Gesas.
``Then there will be lots offered to all of the third-party prospective buyers,'' he said.
Just who will be bidding remained cloudy in early April. High Ridge Partners did not return telephone calls. But court documents indicated that, as of April 2, the firm had contacted a dozen potential buyers, including most major U.S. housewares molders.
According to court records, as of April 2 only three indicated a definite interest in making a bid: Home Products International Inc. of Chicago, Arrow Plastic Mfg. Co. of Elk Grove Village, Ill., and Graham Partners of Wayne, Pa.
Home Products has no plans to buy all of StyleMaster, but instead is ``looking to cherry-pick'' some assets, according to HPI President James Tennant.
``We need to see the asset list. We are only interested in selected assets. We are definitely not interested in the entire company,'' Tennant said.
Graham Partners, an investment fund that seeks midsize companies, is affiliated with Graham Group and Donald C. Graham, known in the plastics industry for Graham Packaging Co. LP and Graham Machinery Group in York, Pa. Joe May, managing principal, said Graham Partners owns a few other plastics processors.
He was waiting for an information packet. Asked April 4 if Graham Partners plans to bid, he said, ``I don't have any information to make a judgment on that.''
Arrow Plastic did not return a telephone call seeking comment.
Everything rides on the April 19 auction, lawyers said. Lauter, who respresents Matrix IV, said he wants the court to convert StyleMaster to a Chapter 7 liquidation case, if Williams and current owners fail to buy the firm.
``If the insiders are not successful, there's no reason to keep it in Chapter 11 because there's nothing to reorganize,'' Lauter said.