Stretch films manufacturer Pinnacle Films Inc. will enter Chapter 11 bankruptcy, the company said Sept. 23.
In a letter to Pinnacle customers, Bill Rice, the firm's founder and president, said operations at the Charlotte, N.C., extruder will be suspended for two to three weeks until Pinnacle restructures resin purchasing from its suppliers.
The business environment during the last two years has been exceptionally difficult and impossible to predict, Rice said in the letter.
The stretch film market in particular has been adversely affected by the economic downturn. With the closing of manufacturing facilities and decreased demand, the stretch market size has decreased.
The stretch film market has decreased in size by 20-25 percent from the 2006-07 period, Rice said. Excess production capacity has resulted in all manufacturers cutting prices to be able to run their lines and maintain market share, he added.
Rice also cited the severe costs of defending against an ongoing lawsuit by Quintec Films Corp., as a factor in the bankruptcy filing.
Quintec of Shelbyville, Tenn., filed suit against Pinnacle in 2006, alleging patent-infringement related to seven-layer stretch film technology. The case is before Judge Harry Mattice of U.S. District Court in Winchester, Tenn.
Once we restart manufacturing in the next two to three weeks, any orders open in-house will be priced at 7 percent above the pre-Sept. 27 pricing level, Rice said.
Rice founded Pinnacle in 1999, focusing exclusively on seven-layer cast film using metallocene linear low density polyethylene.
By 2005, the company had grown to three lines and had planned to keep expanding until four cast lines were in place.