By Jim Mackinnon
Beacon Journal business writer
Macedonia manufacturer Empire Die Casting Co. Inc., which filed for Chapter 11 bankruptcy last month, has prospective buyers.
The company also filed paperwork with the state saying Empire’s 211 employees, including 40 salaried people and 169 hourly Teamsters, could lose their jobs by the end of the year unless they are rehired by whoever buys the company.
But the Macedonia business expects to be sold by the end of the year with operations to continue and with little to no loss of jobs, the firm’s bankruptcy lawyer said Wednesday. An auction is slated for mid-December.
“We fully expect the company will be sold as a going concern,” said Marc Merklin, bankruptcy attorney with Akron law firm Brouse McDowell, who is representing Empire. “The idea is to have a sale of the business as a going concern. This is not a liquidation.”
The company continues to make products for its customers, he said.
“The business is doing well,” Merklin said. “So far, it has been a pretty smooth process.”
Hudson-based New Growth Capital Group LLC initially said it intended to buy Empire’s assets for $11.7 million but other prospective buyers have emerged, Merklin said.
New Growth or one of those other businesses could end up being the so-called “stalking horse” bidder by a Nov. 15 deadline, Merklin said. “We are still talking with them [New Growth].”
A stalking horse bidder makes the opening bid in these kinds of bankruptcy auctions. Court documents said other unidentified businesses are interested in the company’s assets.
The purchase would include some liabilities but not employee bargaining plans or pensions, according to court documents.
The Chapter 11 filing means any buyer will not have to assume the company’s major pension liabilities, Merklin said.
No one would be interested in buying Empire Casting with its pension obligations, Merklin said. The pension liabilities, largely with a Teamsters multi-employer plan, range between $3 million and $17 million, he said.
“So, we had to file the bankruptcy to have the sale,” Merklin said.
The company is working cooperatively with the union on the bankruptcy proceedings, Merklin said.
A representative of Teamsters Local 416, which represents 169 hourly employees at Empire Casting, could not be reached for comment Wednesday.
Empire Casting’s new buyer will have to negotiate a new contract with the Teamsters, Merklin said.
As part of the bankruptcy process, Empire Casting filed what is called a WARN notice with the Ohio Department of Job and Family Services, saying there is the possibility of a significant loss of jobs.
“Based upon the information available now and assuming the sale goes through as intended, the new owner may offer employment to some or all of Empire Casting’s employees, but that is entirely outside the company’s control,” company President Robert Hopkins said in a letter to the state. “It is our current understanding that the potential buyer will continue to operate a die casting company under new ownership and a different name.”
Merklin said the company has met with its employees and that they were told ahead of time that the WARN notice would be filed.
Empire Die Casting, which dates to 1948, does aluminum and zinc diecasting for automotive, aerospace, appliance, electronics and other industries. The business is on East Highland Road. Empire Casting said it had about $34 million in annual sales its last fiscal year.
The company said it retained Amherst Capital Partners in August to look for a buyer. It filed for Chapter 11 bankruptcy on Oct. 16. The filing said the company had between $10 million and $50 million in assets and between $1 million and $10 million in liabilities.
The company said it was heavily financially constrained by having to contribute to a Teamsters multi-employer pension plan. “The debtor’s [company’s] contribution obligations to the plan are a substantial source of the debtor’s financial stress,” Empire Castings said in a court filing.
“The debtor has robust capabilities providing precision cast parts to customer specifications,” Empire Castings said in a filing. “Over the last five years, profitability and cash flow have deteriorated due to production inefficiencies which caused inflated overtime costs, premium weight charges, containment costs and yield issues.”
Nearly 98 percent of the company is owned by Richard Rogel, Empire Casting’s chairman and chief executive officer, according to court documents.
Empire Casting’s assets are scheduled to be auctioned at 10 a.m. Dec. 18 at Brouse McDowell’s offices on South Main Street followed by a sale hearing on Dec. 19 in U.S. Bankruptcy Court in downtown Akron. Any sale of assets is supposed to be completed no later than Dec. 31.
Jim Mackinnon can be reached at 330-996-3544 or email@example.com