The recent bankruptcy filing of resin distributor and reseller Thornton & Co. Inc. isn't a reflection of the broader resin distribution field, according to officials with similar firms.
In the Aug. 10 filing, Southington, Conn.-based Thornton cited recent drops in resin prices as a reason for the filing. Those drops caused the firm's sales to take a dip of more than 20 percent and left it with high-priced inventory, officials said.
Other third-party resin firms faced the same price drops that Thornton did, but made it through in better shape, officials with the other firms said.
“Welcome to the commodity world,” said Kevin Chase, president of distribution firm Chase Plastics in Clarkston, Mich. “If you buy stock at $300 and sell at $200, you're not going to be in the market very long.”
Another industry executive added that processors who buy from resin distributors “shouldn't be concerned” about the Thornton bankruptcy.
“That's this type of business,” the executive said. “You roll the dice. If you think the price of material is going up, you invest in rail cars.
“If it goes up, you're competitive, but the knife can get you on the way down,” he added. “You need inventory priced for the market.”
Thornton — with annual sales of about $200 million — filed for Chapter 11 bankruptcy protection in Hartford, Conn. The filing came after a plan to repay suppliers was rejected by Thornton's primary bank, officials with the company said.
The plan was turned down by People's United Bank of Bridgeport, Conn. In early September, Thornton vice president Jake Thornton said that his firm had reached an agreement with People's that would allow Thornton to sell down its resin inventory over the next several months.
“We can sell it better than [the bank] could bring in to liquidate,” Jake Thornton said. Bank officials could not be reached for comment.
Thornton's largest single unsecured creditor is Formosa Plastics Corp. USA, which is owed almost $2.1 million. Westlake Chemical Corp. is owed more than $2.2 million through two separate units.
Annual resin sales at Thornton total more than 300 million pounds, mostly in prime and off-grade polyethylene and polypropylene. The firm has retained Gordian Group LLC of New York as its financial adviser.
Thornton is continuing with a complaint it filed against People's United on Aug. 24. In the complaint, Thornton makes several claims against the bank, including that it failed to understand Thornton's business and that it tried to sell the firm to competitor Ravago Americas of Orlando, Fla. Officials with Ravago could not be reached for comment for this story.
In early September, Jake Thornton was upbeat in spite of his firm's recent struggles. “Every day is a little brighter,” he said. “There's definitely life after bankruptcy.”