Axion International Files for Bankruptcy to Sell Assets
December 02 2015 - 08:10PM
Dow Jones News
Axion International Holdings Inc. filed for chapter 11
bankruptcy protection Wednesday with plans to sell its assets.
The Zanesville, Ohio-based company, which makes railroad ties,
construction mats and other building materials, said in court
papers it has a bid lined up from one of its investors, which it
aims to put to the test in an auction process.
Investor Allen Kronstadt has agreed, through what is called a
credit bid, to forgive at least $3.2 million of the approximately
$5.2 million he has lent Axion in exchange for its assets.
The publicly traded company blamed its bankruptcy filing and
need for a sale on liquidity issues and recurring operational
losses. It has sought to right the ship by curtailing production,
liquidating available inventory and seeking new investors, but
these efforts have been "largely unsuccessful," the company said in
court papers.
The company recently disclosed its doubts about its ability to
continue as a going concern.
To fund its operations through a sale, Axion is seeking
bankruptcy-court approval to tap a $2.2 million loan from Plastic
Ties Financing LLC, a company for which Mr. Kronstadt serves as
manager.
"These chapter 11 cases will allow the debtors to maintain
operations and save jobs while providing the necessary time to
complete the current sales process for the benefit of
stakeholders," Axion Chief Financial Officer Donald W. Fallon said
in court papers. "Absent the protections of the bankruptcy code,
the debtors will run out of cash, shut down operations, lay off
employees and liquidate, all to the detriment of the debtors'
employees, customers, suppliers and creditors."
Axion reported debts in the range of $10 million to $50 million
in its chapter 11 petition, which was filed with the U.S.
Bankruptcy Court in Wilmington, Del. The company said it doesn't
believe there will be funds left over for unsecured creditors after
secured and other higher-ranking claims are repaid.
Write to Jacqueline Palank at jacqueline.palank@wsj.com
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(END) Dow Jones Newswires
December 02, 2015 19:55 ET (00:55 GMT)
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