On Feb. 1, a federal bankruptcy judge is scheduled to hear Superior Plating’s request to sell some of its equipment and chemicals. In the past two weeks, the last few orders made their way out the door, and a few employees stayed around to ensure a clean and orderly shutdown, even though that might cost them opportunities to secure other jobs.
And, perhaps as early as Feb. 13, the building and parking lot will go up for auction.
It’s the end of a 90-plus year run for Superior, which has been at its 315 First Avenue NE location since the mid-1950s.
Court records show that the company has been averaging about $6 million per year in revenue for the past two years. According to Superior’s President Mike McMonagle, revenues were running $12 million to $15 million 12-15 years ago, $8 million to $10 million more recently, and dwindled to the $6 million level in about 2008.
He said much of the decline came because U.S. firms have moved manufacturing operations to other countries.
With revenue down, he said, the costs of maintaining and heating an old building, and “a lot of costs associated with labor and pollution investigations and so forth” began to weigh too heavily on the firm’s finances.
He said the company has been trying for some time to sell the site and move its operations, but because of several issues, including uncertainty about environmental cleanup costs, they “couldn’t get a buyer to step up and just do it,” he said. The company received offers, he said, but “the contingencies were quite numerous.”
McMonagle said three developers have shown interest in the upcoming auction. One of them, CCGS Acquisition LLC, has provided Superior Plating a $1.3 million line of credit at 12 percent interest, called debtor-in-possession financing, to keep it operating after it filed for bankruptcy protection Nov. 15.
The financing included a $2.5 million offer to purchase the property, provided the environmental cleanup issues are “not insurmountable.” If CCGS completes the purchase, it will retain the amount it has lent to Superior, and pay the rest of the $2.5 million to Superior in cash. If another company makes a higher bid at the upcoming auction and ends up buying the property, CCGS will get its principle and interest back, plus a $125,000 “breakup fee.”
Superior’s bankruptcy filing shows $3,751,805.29 in assets, most of which is the estimated $2.5 million value of the building and land. The filing shows $4,414,303.59 in liabilities, most of which ($2,529,717) is a withdrawal liability to the IUE-CWA Pension Fund.
McMonagle said the pension liability is an “actuarial figure” based on future benefits for current employees and retirees. He said the company has made all of its required contributions to the pension fund to date, and he is not certain how the pension liability will fare when the building is sold and the company might have money to pay some of its liabilities. “We have continued to pay” pension contributions, McMonagle said. “We are not in arrears.”
He said developments in the investment world have resulted in the pension plan being under-funded.
As of Nov. 15, the company had about $148,000 in cash, about $500,000 in accounts receivable and about $600,000 worth of equipment.
The company owed about $365,000 on a secured loan from Northeast Bank, about $110,000 in “unsecured priority claims” such as payments due to employees, and about $1.4 million in “unsecured non-priority claims” in addition to the pension withdrawal liability, mostly bills for goods and services.
About $945,000 of that debt is owed to Plating, Inc., which owns 100 percent of Superior Plating. Plating Inc. is a St. Paul firm that is owned by its employees through an Employee Stock Option Plan (ESOP). Superior’s management and clerical employees are also part of the ESOP, its union-represented workers are not. All Plating Inc. employees are part of the ESOP, McMonagle said.