Pain continues to hammer the automotive supply base, as Vincent Industrial Plastics Inc., a 28-year-old custom injection molder, is bankrupt and going out of business in Henderson, Ky.
On Sept. 17, a bankruptcy judge authorized the company to sell tooling and inventory, to avoid disruption to customers.
James Vincent Sr. founded the company in 1981. It grew to become a 300-employee molder with more than 70 injection molding machines, supplying automotive, appliances, packaging and consumer products. Employment is down to about 70, court documents said.
Vincent Industrial is an automotive Tier 1 and Tier 2 supplier that produces plastic injection molded components used on virtually every vehicle made in North America, according to its Web site.
In late 2005, the molder signed a credit agreement with Wells Fargo NA, secured by its assets, according to documents in the bankruptcy case. But in 2007, Vincent Industrial suffered from an increasingly significant downturn in business that triggered loan covenants and put the company into default.
Wells Fargo held off on foreclosure for 11/2 years, giving Vincent Industrial time to restructure and seek a buyer.
But the collapse of the automotive business hurt. The events of the past year made it impossible for Vincent Industrial to continue its business, the company said in court documents.
On June 19, the molder entered into a liquidation agreement with Wells Fargo, where Vincent agreed to an orderly wind-down of its operation and surrender of its property to Wells Fargo. The bank, in turn, funded limited operations for key product lines and employee salaries.
The molder owes Wells Fargo about $4 million.
According to court documents, Vincent Industrial and the bank signed a letter of intent to sell the property, but the deal fell apart when three resin compounders Diamond Polymers Inc. of Akron, Ohio, and QTR Inc. and EnCom Inc., both of Evansville, Ind. filed an involuntary Chapter 7 bankruptcy proceeding against the plastics molder July 29.
Vincent Industrial then asked the court to convert the case to a Chapter 11 bankruptcy. The judge approved that move Aug. 13.
The motion approved Sept. 17 allowing Vincent Industrial to sell tooling and inventory details the cascading effect that problems at one supplier can have on the automotive industry, which is built on just-in-time delivery: A shutdown of the operations of Vincent Industrial without a stable transition plan would create ramifications throughout the industries served by Vincent Industrial that would cause great damage to its customers, their customers and potentially, the industries as a whole.
To avoid that problem, Vincent Industrial, Wells Fargo and key customers developed a plan to keep the molder operating for a limited time. It will manufacture parts banks while its molds are moved to other plastics processors, according to recently-filed court documents.
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