Potential Kingsbury buyer won’t make commitment to Keene

A New York firm has made an offer to buy the bankrupt Kingsbury Corp., but the firm may not continue Kingsbury’s operations in Keene, keep its 60 workers employed or even reimburse them the $240,000 in back pay that the company owes them.Optimation Technology Inc. of Rush, N.Y., has offered to purchase Kingsbury’s equipment and business for $2.6 million, but not the real estate, and it has made no commitment to keeping the manufacturer in Keene, where it has been for 135 years.At this point Optimation is seen as a stalking horse for other bidders at an auction tentatively scheduled for January. A bankruptcy hearing to set up the bidding process is scheduled for today.Optimation, a manufacturing firm with a seven-person engineering branch in Nashua, would operate Kingsbury as a going concern, said Robert J. Keach, a Maine attorney who is representing the bankrupt estate.”It does what Kingsbury does, and it does have a partner in the automotive industry,” he said. “But it is an open issue of whether they would be operating in that building or in some other city or state.”And the bid would fall short of the total $4.5 million in debts, though it is almost enough to take care of secured creditors, though not enough to pay most of the unsecured creditors — including the workers — who are first in line, Keach said.”Almost enough, but not quite,” he said. “But we do hope that the auction would put the price up so that it will be enough.”Keach said that there are at least six bidders who told him they planned to be at the auction — some who were interested in being the stalking horse but did not come up with an adequate and timely bid compared to Optimation’s, and some who want to be “overbidders.”For another bid to be successful, it would have to be at least $180,000 more than the $2.6 million bid by Optimation, and they would have to pay Optimation $105,000 as a “break-up” fee and reimburse it $25,000 for expenses.While economic considerations are of primary concern, Keach said, the debtor and the court can also consider whether the firm will remain in Keene. For one, that would benefit unsecured creditors that would continue to supply the company.Kingsbury filed for bankruptcy on Sept. 30 to ward off an auction of its equipment by a Florida creditor. The company, which started out making sewing machines and cast-iron toys in the 19th century, has focused on the automotive industry since World War II, producing nearly $200 million worth of equipment in the last decade and a half at its 300,000-square-foot facility.But when the recession hit the auto industry in 2009, Kingsbury had to borrow heavily. Workers even ended up working two weeks without being paid over the summer, but one creditor finally lost patience and seized the company’s equipment.Instead of paying the workers, the bankruptcy company used its funds to hire an investment banking firm to market it for sale, and 38 parties expressed some interest. Many of them may show up at the auction, Keach said. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW