Soo Plastics Inc. has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The custom injection molder has received a $5 million debtor-in-possession financing package from General Motors Corp., a major customer, to sustain the company until a sale is complete.
The Sault Ste. Marie, Mich.-based molder filed Sept. 13 in U.S. Bankruptcy Court in Detroit. GM is Soo's largest customer, representing nearly 90 percent of $25 million in sales.
In a letter to employees, President Barbara Hooberman cited ``a number of events that seriously affected our profitability and ultimately our ability to pay our vendors in a timely manner.'' Officials would not elaborate on the items, but said they have been corrected.
Barbara Rom, Soo's lawyer, said the firm has $15 million to $17 million in assets, with about $16 million to $18 million in debt.
``We're obligated to find a major investor or purchaser no later than Oct. 10 under the terms of the DIP package,'' Rom said. ``It's very unusual for a major customer to provide that level of financing. It shows their level of support.''
Soo's normal operations are currently profitable, apart from bankruptcy expenses, said Louis Glazier, president of Franklin Advisors LLC of Farmington Hills, Mich., which is advising the firm.
Soo's goal is to have a letter of intent with a prospective buyer by Oct. 25, according to David Eberly, senior managing director with Farmington Hills-based Beringea LLC, which is handling the sale.
Eberly said the business will be sold as a going concern and nothing will be auctioned off. Pending bankruptcy court approval, officials expect a sale to close by Dec. 9.
``This business is nothing like a typical company in Chapter 11,'' he said. ``When businesses go into Chapter 11, they usually get run down. This is not the case here at all. The company is in terrific shape - the operations are efficient and the plant is clean.''
Soo has been named a GM supplier of the year twice, in 1999 and again in 2000.
The company's current work force is about 200, sliced by about 30 during the past month or so. Soo is maintaining an uninterrupted flow of components to customers, officials said. The company operates one 135,000-square-foot facility in Michigan's Upper Peninsula with 24 injection presses from 150-2,200 tons. It also has a sales office in Farmington Hills.
The company has been owned and operated by Hooberman since 1998 when she inherited it from her father, Julius Novick.
``My father was dedicated to the success of this company,'' Hooberman wrote in the letter to employees. ``He invested very significant amounts of money to help Soo Plastics grow. We became a very well-respected supplier to our customers and a leading employer in the city.''
Hooberman did not return calls.