Gloucester Engineering Co. Inc. has shipped a seven-layer cast stretch film line to Scientex Packaging Film Sdn Bhd of Shah Alam, Malaysia — positive news officials announced to offset a spate of reports about GEC's debts and an involuntary Chapter 7 filing.
The line is scheduled to be in use by August. Scientex Packaging is a subsidiary of Scientex Bhd, which is traded on the Malaysian Stock Exchange.
“The last few months have been challenging financially for GEC, which has resulted in negative rumors regarding our long-term viability,” Mark VanBuskirk, vice president of sales and marketing, said in a news release. “The shipment of this line is proof that GEC has weathered the storm and is focused on continuing to serve the needs of our customers.”
The Gloucester, Mass.-based film equipment maker has faced a cash-flow squeeze from the recession. Blue Wolf Capital Management LLC, a New York private equity firm, recently announced it has provided a credit facility to the company for its working capital requirements, but officials have not released detailed plans for future operations.
In March, three creditors filed papers in U.S. Bankruptcy Court in Boston to force GEC into Chapter 7 liquidation. The following month, two of the creditors — Plastifar SA and Hub Technologies Inc. — filed a motion to dismiss their Chapter 7 request. The third creditor in the original Chapter 7 filing, Ranor Inc., has not joined the other two in seeking its dismissal.
But two other creditors opposed ending the Chapter 7 case, and Bankruptcy Judge Joan Feeney held a June 3 hearing on all the motions. There, she denied the motion to dismiss, but allowed Plastifar and Hub to withdraw, and they did.
But the Chapter 7 case is not over. Judge Feeney is giving other creditors until June 18 to join the involuntary bankruptcy case.
Meanwhile, other Bankruptcy Court filings this month shed light on money GEC owes to flat-die maker Cloeren Inc., as well as how much GEC's owners paid to former owner SMS GmbH to acquire the machinery maker in 2007; when German industrial conglomerate SMS owned the company, it was called Battenfeld Gloucester Engineering Co. Inc.
GEC owes Cloeren about $1.2 million, according to a June 2 affidavit of President and CEO Peter Cloeren. The die maker in Orange, Texas, is one of the largest unsecured creditors.
GEC issued a secured promissory note of $11.4 million for Battenfeld Gloucester, which was the final sale price, according to an affidavit of Pittsburgh lawyer Donald Shade, who represents Battenfeld Gloucester. That makes Battenfeld Gloucester by far the largest secured creditor, which court documents have pegged at $13 million.
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