A Chicago plastics housewares maker that previously filed for bankruptcy protection with the intent of liquidating will instead be sold to a new owner.
Home Products International Inc. has found a buyer in iPoly2 Inc. willing to pay $5 million for the company's Chicago assets, which includes equipment at two locations.
That's $1.2 million more than HPI anticipated raising though an auction of assets, according to a filing with U.S. Bankruptcy Court in Chicago.
It was just about a month ago that HPI filed for protection from creditors, indicating at the time that the company had been unsuccessful in finding a buyer.
HPI, which also made ironing boards, found itself at the end of its financial rope and blamed rising resin and steel prices.
Chief Financial Officer James Auker, in a previous filing, indicted raw material costs have been extremely volatile during the past two years, with resin prices doubling and steel prices tripling. "The debtors have had only moderate success passing along those price increases to its customer base," he said.
IPoly2, which intends to "quickly restart manufacturing operations" will receive machinery and equipment located at 4501 W. 47th St. and 5507 S. Archer Ave., both in Chicago "as well as any molds or tools owned by the seller whether or not physically located" at the two sites, a July 7 court filing states.
The purchase agreement also includes unfinished inventory and raw materials, including approximately 700,000 pounds of resin, as well as finished inventory not subject to a purchase order or sales agreement as of June 28, the filing states.
"The debtors will receive significantly more value from this sale than they were likely to get from the auction, and they will receive the funds within a few days of the sale being approved and the closing occurring," Auker said in the latest filing.
"It is my understanding that the buyer may offer employment to a number of the debtors' former employees and seek to enter into new contracts with a number (of) the debtors' vendors, which would benefit the community," he continued.
The purchase by iPoly2 does not include machinery, equipment or real estate at HPI's Seymour, Ind., facilities where the company made ironing boards. HPI, in March, had said it was closing the ironing board site to focus on plastics.
HPI used the Homz brand for both plastic products and ironing boards. The name is being acquired by iPoly2, which has agreed to negotiate a license agreement for the name's use with the seller or subsequent owner of the shuttered ironing board division.
Both plastics locations in Chicago are leased, and the new owners are expected to only move forward at one site.
"Buyer has informed seller that buyer intends to enter into a new, post-closing lease for the 47th Street facility with the landlord," the court filing states. "Buyer has informed seller that buyer has no intention of leasing the Archer facility after the closing date. Accordingly, seller intends to reject the Archer facility lease at some point following the closing date."
The new owner also is expected to reject a contract with unionized workers at HPI, but it signaled a willingness to move forward with unionized workers.
"Buyer will likely make offers of employment to certain former union employees on terms and conditions set by buyer, and buyer will recognize and bargain with the union to the extent required by National Labor Relations Act," the court filing states.
HPI officials previously indicated that 146 workers at the Chicago facilities would be laid off starting May 20.
HPI's original bankruptcy court filing indicated that between 200 and 999 creditors were owed at least $50 million. The company listed assets valued at between $10 million and $50 million. Customers for the company's totes, carts and bins included Walmart, Target and Amazon.
A representative for iPoly2 of Wilkes-Barre, Pa., could not be immediately reached for comment July 8.
HPI has proposed a bankruptcy court hearing for July 11 to consider the sale.