While officials investigate the fatality of a worker at structural foam molder Fort Wayne Plastics Inc., unsecured creditors of the company's parent are seeking to reverse the recent purchase of the parent, Katy Industries Inc.
Shacarra Lashae Houge, a 23-year-old Fort Wayne Plastics employee, died Jan. 7 after she was involved in an industrial accident, according to the Allen County Coroner. Cause of death was multiple crush force injuries due to an industrial press accident. The coroner and the Allen County Sheriff's Department are investigating the incident. Indiana's Occupational Health and Safety Administration is also investigating the incident, according to an OSHA spokeswoman.
A spokeswoman for Katy told Plastics News on Jan. 8 that it had no comment on the incident.
Meanwhile a lawsuit is underway in which Katy unsecured creditors are suing Victory Park Capital, the private equity that led the purchase of Katy Industries out of bankruptcy on July 17. The creditors allege that Victory Park improperly funded the purchase with funds it previously made available to Katy. Katy was renamed American Plastics LLC after the sale.
Katy, based in Bridgeton, Mo., produced housewares and commercial cleaning products. It bought Fort Wayne Plastics of Fort Wayne, Ind., in February 2014. Katy, now called American Plastics LLC, owns the brand names Continental Commercial Products, Contico, Wilen, Fundamentals and Fort Wayne Plastics.
U.S. Bankruptcy Court documents allege Victory Park used $36.7 million it made available to Katy as of July 2016 as currency in the July 2017 purchase of Katy out of bankruptcy. The suit alleges Victory Park, which held a big stake in Katy prior to the acquisition, was a controlling shareholder in Katy and that the money should be considered an equity infusion instead of a loan to finance the acquisition. The transaction was worth $63 million.
The suit also alleges that Charles Asfour, former chairman of Katy, breached fiduciary duty in the deal.
The last proceeding for the lawsuit was held Nov. 9. Transcripts were heavily redacted. The redactions are due to expire on March 8, unless court grants an extension.
In an unrelated matter, Victory Park and six affiliates are being sued in a class action that alleges they operated an illegal online payday lending scheme while exploiting a Native American tribe's sovereign immunity. The scheme was designed to shield the defendants from federal and state regulations that govern interest rates. ClassAction.org reported the scheme involved the Chippewa Cree Tribe, which was paid 4.5 percent of the defendants' revenue in exchange for the use of the tribe's name. The report indicated defendants charged interest rates as high as 378 percent to borrowers in financial straits.
