N.Y. firm buys Kingsbury for $3.1m

The last-minute $3.1 million sale of Kingsbury Corp.’s assets to Optimation Technology could not have been any better and it could have been worse, all parties agreed Monday in U.S. Bankruptcy Court in Manchester.The good news is that some 60 workers will get back three weeks of unpaid wages that they have thus far been denied since the Keene-based machine tool company’s bankruptcy filing, seven engineers will keep their jobs — with the possibility of others being hired back — and some large secured credit holders will get nearly all their money back.The bad news is that the plant will be shut down, the remaining manufacturing workers will be out of a job, and all workers and retirees will lose hundreds of thousands of dollars of accrued vacation time and other benefits.Optimation CEO Bill Pollock, who attended the hearing, told NHBR that he will abandon the Kingsbury site in Keene and move the engineers to a nearby office park, the location of which he did not specify, with the intention of bringing back other former Kingsbury engineers and hiring others, increasing the staff size to 20 to 30 over the next several years.Optimation — which is based in Rochester, N.Y., with a satellite operation in Nashua — plans to continue the Kingsbury “legacy,” said Pollock — machining primarily for the auto industry and keeping the Kingsbury name alive.But because Optimation is more diversified, the engineers could design equipment for other industries when the automobile industry shrinks, as it has during the last several years, he said.”It will be a lot more stable employment,” Pollock said.But that’s little comfort to Don Maylin, a now-retired worker who used to paint parts at the company. Maylin, who was at the hearing, has spent years at the firm and even put off taking his paid vacation to help keep the company going.The company stopped paying for health insurance in February 2009, and it “effectively prohibited” taking accrued time for two years, according to a United Auto Workers filing on the matter, both actions in violation of the union contract.Maylin, however, saw it as voluntary sacrifice, a pulling together.It was those three weeks missed pay last July that really broke Maylin, he said. Following a divorce, he lost his home to foreclosure. He just turned 62, so he now will now live on his Social Security, he said. And while he said he’s glad he will get some $2,400 in back pay, he said he was owed some $12,000 more for accrued vacation time.Hobbling onLast week, there was a good chance Maylin and other workers would not get a penny for all their loyalty to a company that has been a fixture in Keene for 135 years.Kingsbury, which employed 1,300 workers in its heyday, has hobbled on with less than a tenth that amount the last few years, before it declared bankruptcy at the end of September.At the hearing on Friday, and continuing through Monday morning, objections and responses were flying, sent over the court’s electronic system by the state Department of Labor, the UAW, TD Bank, which holds the mortgage on the property, and Utica Leasco, LLC and Diamond Business Credit LLC, which hold the lien on the equipment.Nobody even contested Optimation’s $2.6 million bid last week for the equipment, and the business, even though there was a lot of “dancing around with partners,” hinting of greater bids to come, in the words of Kingsbury attorney Robert J. Keach.So the bankruptcy auction was canceled, and all hopes for a higher price fell through. It looked like there would not be enough to satisfy even the secured creditors, much less the workers.Utica complained that the equipment is worth more than the $1.7 million that they were owed, and Diamond threatened to thwart the deal unless they got a specific figure on what they were going to get.But by Monday morning, Optimation upped its bid by $500,000 to $3.1 million, meaning that Utica would get $1.55 million, $200,000 short of its claim, while Diamond accepted $900,000, a $300,000 shortfall.Workers would get $122,000 — which basically covers the three missing paychecks. But the state Labor Department estimated that they were owed at least $224,000 if various benefits were included. And, it turned out, workers have been foregoing their vacation time for years.According to the UAW’s limited objection, workers were owed $350,000 on priority claims, counting health benefits, vacation and even union dues and nonpriority claims of at least $537,251 — primarily older accrued vacation pay.”It really is close to a million,” UAW attorney Nicole Horberg Decter told NHBR.But Horberg Decter told the court she was dropping her objection. “We did not see a better path. If we did, we would be fighting for it.”And the DOL said it would follow the union’s lead.”If the union is happy with the deal, we will not stand in the way,” said senior assistant Attorney General Peter Roth, representing the DOL.There is still some hope for the workers and other creditors in the sale of the Kingsbury real estate. Keach estimated that it could sell for $3.5 million to $4.5 million. After the mortgage and various expenses are paid off, that would leave about $800,000 on the low end of the scale, though how that amount will be split up remains to be seen..According to Keene city assessment records, the land alone is worth about $1 million. With the building, the total is $4.2 million — down from $5.5 million the previous year — but that estimate is based on a still-operating business. Only the market could tell.Judge J. Michael Deasy said he was “skeptical” of any price estimate given the current real estate market.So were many other parties in the case, noting that there were unknown environmental problems on the property and other costs, such as security, maintenance, taxes and real estate fees.In any case, Keach said he hopes that the final agreement will be signed by the end of the week, and that that whole transfer will be finalized in about six months. –BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW