Foil and laminate manufacturer API Americas, based in Kansas, made the filing on Sunday (2 February), listing $44.4m (£31.1m) of secured debt.
In a first-day declaration, chief restructuring officer Mitchell Gendel attributed the firm’s situation to unforeseen costs relating to its relocation to a new facility and “a significant drop in demand for their products, due to unfavourable market dynamics and a shift toward more environmentally sustainable products”.
The drop in demand was also attributed to tobacco customers shifting to lower-cost, alternative packaging, and competitive pressures due to overcapacity in the industry. In turn, the declining demand has led to decreased free cashflow and operating losses.
The declaration said the company’s consolidation into new premises had resulted in a net investment of around $8m and was followed by “unforeseen expenses due to the relocation and start-up inefficiencies”. As a result, sales in the foils business unit declined by approximately $6m from 2016 to 2019.
Furthermore, the declaration stated that API Americas’ acquisition of a laminates plant was also followed by “unforeseen expenditures and adverse market conditions” and that, as a result, its laminates business unit revenue declined by approximately $5m from 2017 to 2019.
A representative from API Americas’ parent company Steel Partners told legal news service Law360 yesterday that the Chapter 11 case for the business would focus on finding a buyer for its assets or winding down its operations.
According to the declaration, API Americas has negotiated with its lenders for permission to use their cash collateral in order to fund the Chapter 11 case.
Gendel said the business requires “immediate access to liquidity to ensure that they are able to continue operating their businesses during these Chapter 11 cases, preserve the value of their estates for the benefit of all parties in interest, and administer a value-maximising Chapter 11 process”.
With UK arm API Group in administration, Steel Partners has closed all three of its UK sites – its headquarters in Stockport, a second site in Sheffield and a third in Livingston near Edinburgh.