Fallout continues from a wave of plant closings by trigger sprayer and lotion pump maker ContinentalAFA Dispensing Co., with the company now facing class-action lawsuits from U.S. and Costa Rican workers over lost wages and benefits.
The St. Peters, Mo., firm filed Aug. 7 for Chapter 11 protection from creditors. The company will pursue an ``orderly liquidation,'' either through a sale as a going concern or by selling its assets, according to a filing with U.S. Bankruptcy Court in St. Louis.
The company blamed higher resin costs, competition from lower-priced imports, and the cost of integrating the former Owens-Illinois Inc. injection molding business, which ContinentalAFA bought in 2003.
Adding to its woes, ContinentalAFA in June lost its second-biggest customer, which sources identified as Clorox Co. In its filing, ContinentalAFA said it had been notified by the customer in 2007 that it would be leaving, ``due to uncertainty surrounding CAFA's restructuring efforts.''
ContinentalAFA, with plants in St. Peters; Bridgeport, Conn.; Forest City, N.C.; and Cartago, Costa Rica, employed about 740. The Bridgeport and Cartago plants closed in July, and the Forest City plant was to close this month.
The company is owned by Harbinger Capital Partners, a New York-based hedge fund founded by financier Phil Falcone. A spokesman for Harbinger would not comment, and ContinentalAFA officials did not return calls.
According to the filing, ContinentalAFA in June hired New York-based investment banking firm Jefferies & Co. Inc. to seek a buyer for its assets, while Joseph Figlewicz of Focus Management Group USA Inc. in Tampa, Fla., has been named chief restructuring officer.
In its bankruptcy filing, ContinentalAFA reported a profit of $1 million in 2007 on sales of $94.8 million, compared with $10.7 million in profit on 2006 sales of $93.1 million. The company has projected a loss for 2008 of $5.3 million.
While it reorganizes, ContinentalAFA is being challenged in court by several lawsuits alleging the firm violated laws covering notification and compensation of workers who were about to be laid off.
Joshua Bridges, an employee at the Forest City plant, filed a class-action suit Aug. 6 in U.S. District Court in Charlotte, N.C., seeking unspecified unpaid wages and benefits under the federal Worker Adjustment and Retraining Notification Act. According to the bankruptcy filing, ContinentalAFA's monthly payroll is about $1.92 million, of which $220,000 was unpaid. The company also estimates it owes $665,000 in accrued vacation pay.
About 230 Costa Rican workers are seeking 250 million Costa Rican colons ($461,300) through a complaint filed with that country's labor ministry. La Nacón, a newspaper in the capital of San Jose, also reported that several workers are suing the company in Cartago's civil labor court. In its bankruptcy filing, ContinentalAFA acknowledged it was contacted by the U.S. State Department about the claims and plans to pay the workers during the normal course of business under its reorganization.