Apple Plastics International LLC, a leading West Coast film and bag maker, may be forced to liquidate following a Jan. 13 move by three suppliers to force the company into bankruptcy.
Apple President Gary Duboff, a respected former president of the California Film Extruders & Converters Association, had been trying to keep production running and sell the company to an outside firm.
Apple, based in Rancho Dominguez, Calif., crashed financially late last year after a boom of activity. In late 2001, the company purchased three other companies - North American Film Co., Tiffany Extruders and Power Plastics - and began calling itself the largest maker of extruded garment bags for dry cleaning and retail uses.
The company recorded annual sales of about $60 million and had about 200 employees after the merger.
``Apple certainly is one of the major players on the West Coast,'' said Howard Rappaport, polyolefins director with Chemical Market Associates Inc. in Houston.
But Apple found itself buried in $31 million of debt, about $18 million of that to Dallas-based lender Guaranty Business Credit Corp., said estate manager Mike Joncich with CMA Business Credit Services. After defaulting on a loan from Guaranty late last year, Duboff assigned Apple's assets to Burbank, Calif.-based CMA to either sell or liquidate the company, Joncich said.
CMA, which gained control Jan. 10, opted to keep the four manufacturing facilities open, and was negotiating with a potential buyer, Joncich said.
But the Jan. 13 liquidation move has put those plans in question.
The suit, filed in U.S. Bankruptcy Court in Newark, N.J., could force the company to liquidate under Chapter 7 of the U.S. Bankruptcy Code. It was filed by Houston-based polyethylene suppliers ExxonMobil Chemical Co. and Equistar Chemicals LP and by distributor H. Muehlstein & Co. Inc. of Norwalk, Conn.
Those companies claim Apple owes them more than $8 million, including $6.1 million to ExxonMobil, according to the filing.
``Everything was upset since the bankruptcy filing,'' Joncich said. ``We put the negotiations on hold until a judge determines if the bankruptcy is dismissed or if the courts take over the disposal of assets.''
Lawyers for the suppliers declined comment Jan. 24. Joncich said that the parties are negotiating to drop the bankruptcy suit. Apple has until Feb. 13 to respond in the case, but a tentative hearing date has been set for Jan. 27, said Chuck Klaus, another CMA estate manager.
Before CMA took control, Apple had 120 employees and was generating about $40 million in sales annually, Klaus said. By hiring CMA instead of filing for bankruptcy, Duboff hoped to sell the company quickly and gain assets for creditors, he said. That option would have cost less than going through bankruptcy, he said.
``We're trying to maximize value to save jobs and preserve Apple Plastics,'' he said. ``We can only achieve that with the cooperation of creditors.''
Meanwhile, Guaranty asked that the manufacturing sites be shut down while the case is in question, Klaus said. But the bank agreed to postpone that decision until after the court hears the case, he said.
``But the assets are certainly worth much more if the company stays open,'' he said.
Apple has extrusion facilities in Spartanburg, S.C.; Paterson, N.J.; and Rancho Dominguez. The firm also owns resin distributor Quality Polymers of Los Angeles.
Duboff also is a shareholder in Compton, Calif.-based Orange Plastics, an extruder Apple owned until three years ago. The financial troubles at Apple do not affect Orange's operations, said Orange President Salim Bana.