HPM, a maker of plastics machinery and wind-turbine components, faces a mounting debt load and legal action.
Morrow County in Ohio is seeking foreclosure for unpaid taxes, Huntington National Bank wants $13.7 million in loans repaid, and a lawsuit from a customer, International Plastics & Equipment Corp., froze some of HPM's bank accounts.
The name of the company is a key part of the legal disputes. The top executive, Christopher Filos, formed a new company called HPM America LLC in June 2008. None of three legal cases name HPM America as a defendant.
On July 31, Huntington National Bank and Taylor's Industrial Services LLC agreed to a court-ordered receiver, who would have broad powers to manage, control and protect the assets, business and operations of the firm, including liquidation.
But nothing has happened. The receiver, Toledo lawyer Christopher Parker, said in mid-October that the Huntington case in Franklin County Common Pleas Court involves Taylor's, not HPM America so he is not authorized to take action.
Meanwhile, because a receiver was named, a Morrow County Common Pleas judge issued a stay Sept. 30, postponing foreclosure pending the results of the receivership.
The mounting legal troubles are the latest challenge to HPM, a fixture in small-town Mount Gilead that dates to 1877, when the company began making apple presses. These days, the aging industrial building sports a new HPM America LLC sign on the front lawn, but not many cars in the parking lot.
Filos did not return phone calls for this story. HPM lawyer Kenneth Goldberg, in Columbus, Ohio, said Filos told him not to comment.
HPM's financial problems surfaced Aug. 19, 2008, when Morrow County Treasurer Daniel Green filed a foreclosure complaint against Taylor's Property Management LLC and HPM Corp. for more than $900,000 in unpaid taxes. At the time, the state of Ohio, which has launched an aggressive plan to boost alternative energy, was offering HPM several million dollars in low-interest loans to help buy equipment to machine precision metal parts for wind turbines, if HPM made payments on the tax bill.
HPM America, which makes injection molding presses, sheet extrusion lines and die-casting machines, is trying to transition into wind power and the hot market of green energy. Facing declines in the automotive market, management three years ago formed a contract manufacturing unit to target wind turbines.
In a Christian Science Monitor story on wind power in August, Filos said HPM owes its survival to the decision to make parts for wind turbines. Without that move, he said, We'd have been out of business long ago.
Now HPM America is selling its own brand of wind turbines for residential and light commercial use. At NPE2009 in Chicago, instead of plastics equipment, the company displayed a 3-kilowatt wind turbine at its booth.
Filos and the company did make a $165,000 down payment toward the tax bill to meet a deadline last December. Two more monthly payments followed, totaling $25,252 but Filos and the company have not made any payments since then, the treasurer's office said.
Treasurer Green said that after HPM stopped paying, the county moved forward with foreclosure.
As of Nov. 19, Taylor's Industrial Services will owe Morrow County $742,362 in personal property taxes, the treasurer's office said. Taylor's Property Management owes $16,814 in real estate taxes.
Huntington bank in Columbus filed its complaint in July. The lawsuit identifies nine defendants, but doesn't name HPM America. It lists a total of $13.7 million owed the bank from a variety of loans, credit lines, revolving notes, a bridge loan and property management guaranties.
The third major case, a federal suit by Ipec, started out as a complaint about faulty injection press components. A later skirmish over frozen bank accounts includes blunt legal language over whether HPM America and Taylor's Industrial Services are really the same company.
Ipec, a cap and closure molder in New Castle, Pa., filed suit in 2007 in U.S. District Court in Pittsburgh. Ipec said it bought 17 Sandretto Series 8 injection molding machines, and all of them had defective screw motors.
Taylor's Industrial Services had bought Italian press maker Sandretto in 2005, but the following year turned control over to the Italian government. Ipec said Filos agreed to replace the screw motors at no charge, which HPM denied.
The Pennsylvania court awarded Ipec a judgment of $361,653 against Taylor's Industrial Services. After Ipec transferred the judgment to U.S. District Court in Cleveland, Ipec subpoenaed the machine maker's bank records with JP Morgan Chase Bank in mid-August, freezing accounts.
Losing access to the checking account hurt. HPM has been unable to pay its employees and other debt obligations as a direct result of the garnishment of the checking account, and its employees have been deprived one payroll, HPM America said in court documents filed Sept. 11. Several employees have terminated their employment because of the nonpayment of wages, the firm said.
HPM America requested a court order to make the bank unfreeze its checking account. HPM America LLC is a company totally separate and distinct from Taylor's Industrial Services LLC and Sandretto USA Inc., Filos said in an affidavit.
Ipec lawyers said Filos is head of both HPM America and Taylor's Industrial Services, which are alter ego entities that use the same business address in Mount Gilead.
Significant amounts of funds have been transferred between the entities, Ipec said.
Parker, the court-appointed receiver in the separate Huntington bank lawsuit, got involved in the Ipec case by opposing HPM America's claim to the bank accounts. Parker said HPM America claims it has leased all of Taylor's equipment, intellectual property and property lines and he charges that is a conversion of Huntington's collateral and a violation of the credit agreement.
In court papers, Parker called the lease an attempt to dispose of assets that rightfully are part of the receivership estate.
In the end, after an agreement between Ipec, HPM America and Parker, the federal judge on Sept. 24 ordered JP Morgan Chase Bank to release $33,264 from the accounts to HPM America. The rest of the money, $77,617, went to into the court receiver's account.
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