Specialty tubing extruder Fluortek Inc. expects to climb out of Chapter 11 bankruptcy protection in the first quarter of 2005 after jettisoning its money-losing scrap subsidiary.
The Easton, Pa., firm voluntarily petitioned for Chapter 11 protection from creditors Oct. 3, according to documents filed with U.S. Bankruptcy Court in Allentown, Pa. Its secured creditor is National Penn Bank of Boyertown, Pa. Affiliated companies that also sought Chapter 11 protection were Fluortek Compounding Inc. and Botti Inc. John Botti owns all three firms.
Fluortek President George Antoci said his firm's problems stem from the difficulties of Fluortek Compounding Inc., also of Easton. Fluortek Compounding recycles scrap wire and cable, reprocessing the resultant polymers and selling copper wire. Some potential customers, however, are sending scrap wire to China, where it is stripped and reprocessed more cheaply than in North America, Antoci said in a telephone interview.
Antoci said the scrap business faces severe competition from Asia. Fluortek Compounding has been losing money and Fluortek recently converted the business to Chapter 7 of the bankruptcy code. Fluortek wants to wind down Fluortek Compounding so that it does not drag down the core business of Fluortek - the extrusion of special tubing and doing related assembly, mainly for medical-device manufacturers.
The Fluortek business itself is doing well, running six days a week and generating good margins, Antoci said.
Fluortek Compounding had sales of about $1.5 million for the first nine months of the year, compared with $7.9 million for all of 2004 and $8.9 million in 2003, court documents show. Two civil suits are pending against the company, by Industrial Distribution Group and by James. E. Brehove.
Fluortek Compounding's biggest unsecured creditors are communication cable companies.
Creditors to Fluortek Compounding are scheduled to meet Dec. 21 in Allentown.