Last-minute deal gives Kingsbury a reprieve

The bankrupt Kingsbury Corp. should be up and running in a few days, thanks to a confidential deal reached Thursday morning to partially pay off a creditor that was literally on the premises preparing to auction off the Keene manufacturer’s equipment next week.But the company’s loyal returning workers will have to wait until Halloween to see if they will ever get paid for the three weeks they worked in July to keep the company going.”Peace broke out,” said Robert Keach, the company’s bankruptcy attorney in explaining the last-minute deal in Bankruptcy Court in Manchester, though perhaps “truce” would more aptly describe the situation.The company, which was shut down on Sept. 19, filed for Chapter 11 protection on Sept. 30, idling about 50 workers.Some of the workers were paid recently and some will be paid going forward, but more than 50 are owed $120,000 for three weeks in July, and according to the filing “suffer financial difficulties because these sums are needed to enable them to meet their own personal obligations.”The workers were the “lenders of last resort” said Senior Assistant Attorney General Peter Roth, representing state Labor Commissioner George N. Copadis, who was in the courtroom (as was an attorney for the United Auto Workers, representing the employees).”They say that a worker is three-paychecks away from a revolution,” Roth added.But it wasn’t the workers who were occupying the plant. It was Utica Leaseco LLC, a Florida firm that is owed $1.25 million on a 1998 loan. It insisted on its right to hold an Oct. 11 auction to sell the equipment it had seized. And it was Utica that Kingsbury paid, though the exact amount is in a stipulation sealed from the public eye.Before Thursday, Utica had opposed a reorganization plan proposed by Diamond Business Credit, another creditor that’s owed $1.3 million, that would enable the company to operate until the end of the year.But Utica – which had a first-priority lien on the equipment – wasn’t going along. Utica pointed to Kingsbury’s own spreadsheet showing that company would lose money every week and that it would end up at the end of the year with even less cash ($87,000) than it had on Oct. 3 ($102,000).Kingsbury countered that the company had a total of some $15 million in inquiries and quotes in the works, though the filing did not claim any signed contracts. On Thursday, however, Keach told NHBR that those quotes were more solid than they looked on paper, and besides, Kingsbury had one another “local manufacturer” that might buy or invest in the company.That information, apparently, was enough to get Utica to back off, at least for now. And Kingsbury could get the its equipment up ad running in less than 48 hours, said the plant’s manager in an affidavit.Kingsbury has been a manufacturing stalwart in Keene for the last 135 years. It started out building sewing machines, before it became the Triumph Wringer Company, which turned out cast-iron toys.The Kingsbury family acquired the company in 1894, and it started making all sorts of manufacturing equipment, focusing on the defense industry during the two world wars. But ever since the 1940s, it has primarily served the auto industry, producing nearly $200 million worth of equipment in the last 15 years at its 300,000-square-foot facility.Iris A. Mitropoulis bought the company in 1998, thanks to financing from Utica, Diamond, TD Bank and the Small Business Administration. However, the recession hit the company hard in 2009, and in March of that year the company was forced to furlough many of its employees and freeze payments to vendors.The creditors renewed financing April of 2009. All together they were owed $4.9 million, but they had nothing to worry about, Mitropoulis said in her affidavit, because the company had $8.8 million in assets.But while the other creditors showed “temporary patience,” by early 2011 Kingsbury faced “increasing pressure, particularly from Utica,” Mitropoulis said. “Observing apparent economic recovery in other sectors of the auto industry, Utica did not understand that manufacturers of custom machinery such as the Debtor would experience recovery on a somewhat more delayed basis.”On July 8, Utica sent a notice of default, and wanted to be paid nearly $1.26 million in five days, Mitropoulis said. On July 13, Kingsbury agreed to give Utica the right to auction the equipment if the company didn’t meet a payment schedule, which it failed to meet.On Sept. 14, Utica said the company needed $300,000 to stop the auction, but – said Mitropoulis – Utica increased that figure by $32,000 two days later because the auction fees were probably higher than estimated. When Kingsbury insisted on only paying the original $300,000, Utica proceeded towards the auction, and Kingsbury moved toward bankruptcy.Aside from the amount of the unknown payment reached in the deal with Utica, Kingsbury would be allowed to use the $300,000 loan from Diamond to pay some insurance premiums to keep various policies in effect, as well as some $20,000 to pay off some crucial creditors this week.And while Judge J. Michael Deasy approved the motion to pay the workers’ back wages, they won’t probably won’t get paid until after Oct. 31, said Kingsbury’s attorneys. That’s when everybody gets back into bankruptcy court and Deasy decides where to go from there.”At the moment, they [the workers] are out of the money,” Deasy said. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW