Patterson, N.Y.-based injection molder Brewster Plastics Inc. has filed for bankruptcy protection and received an initial deal to sell the business.
Brewster Plastics declared $1.8 million in assets and $3.7 million in liabilities, in the June 3 Chapter 11 petition filed in U.S. Bankruptcy Court in New York.
In 2010, the company expanded its facility capacity from 23 to 36 molding machines.
"Unfortunately, Brewster's business did not maintain its growth levels so that it could take full advantage of the capacity of the larger facility," President Brett Wallace said in an affidavit.
Robert Wallace, Brett Wallace's father, owns and founded Brewster Plastics in 1972. It custom-built its current facility in 1997.
Robert Wallace also owns Highland Group LLC, the owner of the factory's property in Patterson. Highland Group also opened a Chapter 11 filing on March 27. It declared $6.4 million in assets and $7.2 million in liabilities.
In 2020, Robert Wallace granted the deed of the property to the Putnam County Industrial Development Agency for tax benefits. The agency then leased the property back to Highland, which leased it to Brewster Plastics and mortgaged it to the agency.
"Brewster continued to use its cash flow to honor its trade obligations to its vendors and service its customers," Brett Wallace said in the affidavit. "It did not have sufficient cash flow, however, to fund payments of real estate taxes as it was required to do under its lease with Highland."
As a result of the non-payment, the property was subject to a tax lien foreclosure proceeding by Putnam County, the affidavit said.
"Recently, Brewster employed as many as 25 full-time employees," it said. "Today, it has 13 employees."
The company filed for bankruptcy "so that it may continue to operate while pursuing an orderly sale of its assets," the affidavit added. It "intends to reorganize by selling its business."
On June 7, the court issued an interim order to authorize payment to employees of wages, salaries and benefits, payment of related taxes, tax deposits and processing fees, and authorized Wells Fargo Bank to honor employee wage, salary, and reimbursement checks drawn on Brewster Plastic's account.
Brewster Plastics posted $1.7 million in sales in 2023, down from $2.9 million in 2022, according to the Chapter 11 petition.
Brewster Plastics also lists the AKT Three Realty and Small Business Association debts as liabilities. The mortgage will be paid in full upon the sale of the Highland property, the affidavit said. The deficiency claim of the SBA will be determined upon the sale of the property.
Brewster Plastics and Highland Group have a deal to sell the plastics company for $376,200, and the real estate for $5.4 million, to Pepperell Mass.-based Celltreat Scientific Products, according to a report by the Westfair Business Journal. The deal is "subject to higher or better offers," the report said.