Three creditors are trying to force Gloucester Engineering Co. Inc. into Chapter 7 liquidation, saying the beleaugured film equipment company owes them money.
The creditors filed an involuntary Chapter 7 petition on March 23 in U.S. Bankruptcy Court in Boston. The machinery maker in Gloucester, Mass., has 20 days to respond after the summons is delivered.
Chairman John Sharood said Gloucester Engineering is talking with the creditors, and expects the bankruptcy petition to be withdrawn.
One of the creditors is a Gloucester Engineering customer, Plastifar SA, of the Dominican Republic, which the machinery company owes $203,500, according to the filing.
The other two are metal fabrication and machining companies in Massachusetts. They are Ranor Inc. of Westminster, Mass., which filed a claim for $234,988, and Hub Technologies Inc. of Middleboro, Mass., which is owed $40,000.
The bankruptcy petition does not give any details about the debts, except the dollar amounts.
Facing a cash-flow crunch, Gloucester Engineering has laid off an unspecified number of manufacturing employees and frozen orders from suppliers. The company e-mailed a letter to suppliers Jan. 20 that told them not to ship goods and services unless they are first contacted by Gloucester Engineering.
Contacted March 26, Sharood said about the bankruptcy filing: We think it's going to be withdrawn. We're in discussion with them right now. We believe it was a negotiating tactic on behalf of one of the creditors.
Gloucester Engineering was stung by the economic downturn, Sharood said. Executives are trying to recapitalize the company.
We're in talks now, but I don't have any specific comments to make. We have not made a secret of the fact that we are looking to recapitalize the company to deal with the effects of the recession of last year, Sharood said.
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