Feng Ping Tooling & Plastics Mfg. Co. Ltd., at one time a fast-growing mold making shop in southern China started by two brothers from Chicago, abruptly closed Dec. 16 and filed for bankruptcy.
Feng Ping's story, however, is a little more dramatic than most bankruptcies.
For starters, there are allegations of 19 employees embezzling $4.5 million to start a competing company.
Right now, the company says its factory campus in Dongguan, Guangdong province, is being blockaded by vendors, who are apparently worried they won't get money they're owed.
As well, its remaining 270 workers, who were not getting paid, “loot[ed]” the factory on Dec. 15 and “[took] out everything they [could] carry,” according to a Dec. 16 notice issued by Feng Ping.
And in a twist that reads like it's from the pages of a spy novel, Feng Ping said the blockading vendors effectively prevented the American owners, James and John Fiocchi, from leaving the factory for 13 days, until the men made a nighttime escape in the trunk of a car.
In the meantime, molds belonging to some Feng Ping customers are apparently trapped in the factory.
Reached by telephone in the United States, managing director James Fiocchi said he was able to remove several hundred molds owned by customers. But he said several hundred more remain inside the factory.
Fiocchi said the situation remains in flux, and he said the company is trying to resolve it. But in that Dec. 16 letter to customers, Feng Ping conceded that it is unable at the moment to remove molds.
“[Due] to the current situation… there is NO [emphasis by Feng Ping] authorized representative at Feng Ping Tooling at this time that can guarantee transfer or return partially built molds,” the company said. “Customers working with ex-employees to retrieve unfinished or finished tools, do so at their own risk. We are told the court will eventually appoint someone to do this.”
The company's notice said it had filed for bankruptcy in local courts.
“It is with regret and sadness that we must inform our customers that Feng Ping Tooling & Plastics Mfg. Co. Ltd. has filed for bankruptcy with the PRC Court of Dongguan, China,” it said. “Effective Dec. 16, 2013, Feng Ping Tooling & Plastics Mfg. Co. Ltd. is closed for business.”
Fiocchi declined to offer details, saying negotiations continue. But Feng Ping's letter to customers provides a detailed timeline of a situation that seemed to spin out of control in recent weeks.
It alleges that from August 2012 to July 2013, a top manager and 18 other employees executed a plan to embezzle an estimated $4.575 million from Feng Ping. The plan involved 33 vendors, Feng Ping alleged in the letter.
When the alleged embezzlement was discovered in July, the employees were fired, according to the letter. But in September they opened a competing mold shop and solicited Feng Ping customers, the company said. That allegedly included recruiting 12 people still at Feng Ping to feed them quotations and confidential customer information.
Feng Ping said it began a recovery plan in September, cutting its work force by 50 percent over two months to make payments to vendors.
But, according to the company, by Nov. 1, Feng Ping's vendors were becoming uneasy, and “threaten[ed] the lives” of several top people who remained at the company, including the new factory manager.
By Nov. 15, Feng Ping decided to sell $2 million worth of equipment to pay down vendor debt. But that did not calm the situation.
“The moment the first piece of equipment was to be sold, more vendors blocked the gates with big trucks because they did not think we would use the money to pay them,” the company said.
By Nov. 18, “nothing [could] get in or out,” the company said in the Dec. 16 letter. “The equipment can't be sold to pay them so there is a stalemate that exists to this day.”
Until the troubles, the company had seemed to enjoy a quick rise. Although it only started in 2008, Feng Ping had grown to several hundred employees. It adopted a high profile, with the brothers giving frequent interviews to trade press, including Plastics News.
They took a large booth at the NPE 2012 show in Orlando, hosted visits from U.S. government officials, and also garnered write-ups in Bloomberg News and a mention in a story in the Chicago Tribune.