The launch of injection machine builder Niigon Machines Ltd. in Vaughn, Ontario, in 2018 was difficult before it even officially started.
First, a patent dispute hampered Niigon's plan to offer just-in-time assembly of modular customizable presses with a five-year warranty.
Then the company had problems gaining traction because of its limited product line — eight basic models ranging from 30 to 600 metric tons — at the same time competitors offered hard-to-beat prices.
Niigon's lack of global sales and service staff hurt, too, as did warranty issues.
And finally, COVID-19 dealt a fatal blow to the business formed by industrialist Robert Schad, an inductee into the Plastics Hall of Fame who had previously started Husky Injection Molding Systems in 1953 and Athena Automation Ltd. in 2008.
Athena essentially evolved into Niigon, which means "for the future" in the indigenous Ojibwa language, starting around 2013. But the transition was fraught with the patent and other problems.
While an attempt to sell the struggling Niigon to Stans, Switzerland-based Benpac Holding AG looked promising in May, the deal fell apart over the summer.
Crushed by debt totaling C$108 million (US$87.3 million) and no prospect for sale, Niigon officials filed for bankruptcy Sept. 24 and the staff of about 60 employees was terminated.
The circumstances leading to Niigon's insolvency came out Oct. 15 during a virtual meeting for almost 200 unsecured creditors owed about C$105 million (US$84.8 million).
The 45-minute meeting was led by Paul Denton, a managing director of A. Farber & Partners Inc. in Toronto, which was appointed both receiver and trustee in the bankruptcy.
"Niigon sprouted out of research and development, focused enterprise, leading-edge injection molding machines and technology," Denton told unsecured creditors.
However, the business was dogged by setbacks.
"Through a confluence of factors, Niigon was never able to achieve the required sales levels nor the critical mass necessary for a profitable operation and instead incurred substantial losses," Denton said.
He put Niigon's assets at about C$15 million (US$12.12 million), excluding patents, and said that isn't enough to cover the secured credit owed to Schad, 92.
"Both losses and working capital needs were funded by substantial shareholder loans, which through mid-2020 was about $105 million," Denton told unsecured creditors.
The list of companies waiting to be paid following the secured creditor is nine pages long. Some of the larger unsecured claims were made by Mold Precision Components in Ontario, which is owed C$2.2 million; Mold Masters Kunshan Co. Ltd. in Jiangsu, China, C$903,865; Stack Teck Co. Ltd. in South Korea, C$512,250; and Stack Teck Systems Ltd. in Brampton, Ontario, C$467,103.
Schad also is listed as an unsecured creditor for C$160,000 he put into the business and C$1 million owed to an affiliated entity called 1297607 Alberta ULC.
When the pandemic was declared in March 2020, "Niigon didn't have the structure or positioning" to survive, Denton said.
Five months later, in August 2020, company officials retained a Toronto bank to look globally for buyers. An extensive marketing campaign culminated in the May 2021 purchase offer.
Benpac Holding wasn't identified as the prospective buyer during the creditor hearing, but Plastics News learned earlier this month that the Swiss company was in negotiations with Niigon officials just before the bankruptcy filing.
Benpac Holding had purchased W. Amsler Equipment Inc. in Bolton, Ontario, in January 2020 and moved it into a Niigon facility in June 2021.
Then negotiations cooled off between Benpac and Niigon.
"Unfortunately after numerous extensions and accommodations over a four-month period, the prospective purchaser was unable to advance the funding to close the transaction," Denton said. "Without the resources to continue to fund operations, the company was left with no viable alternative but to file for bankruptcy."