Tool and die company files for bankruptcy
A company in the area that supplies tooling, dies and related services to the auto industry has filed for bankruptcy.
Walker-based Die Tech Services filed for Chapter 11 bankruptcy protection on March 5 in the U.S. Bankruptcy Court for the Western District of Michigan.
In a declaration filed to the court March 6, Kelly “Casey” Darby, president and majority owner of Die Tech, states the company’s debt obligations to Chicago-based Byline Bank of about $2.26 million “far exceed the value of all assets (that) secure said debt.”
Die Tech also owes back taxes to the IRS and the state of Michigan totaling $480,000, as well as $546,400 in unsecured debt to about 98 creditors.
The company entered into the loan agreement with Byline Bank in March 2018 after Chemical Bank froze its line of credit in 2016 and Die Tech defaulted on its loans with Chemical, according to Darby.
“Additionally, at the time, Die Tech’s monthly debt load from certain other high-interest loans was putting a strain on Die Tech’s ongoing cash position,” Darby says in the court filing. “Therefore, in early 2017, Die Tech began shopping for a refinancing lender.”
As Die Tech waited for its loan agreement with Byline Bank to close, Darby said the company lost $1 million of $5 million in pending purchase orders due to insufficient funds to obtain raw materials.
“Unfortunately, Die Tech has not been successful in replacing the lost manufacturing work, resulting in additional operating losses and general liquidity constraints impacting Die Tech’s operations.”
In December, Die Tech requested loan forbearance from Byline Bank.
Die Tech in January hired Invictus, a mergers and acquisitions advisor, to evaluate its business and gauge interest regarding the sale of the company and/or its assets.
By February, Die Tech’s affiliated company and landlord, DTS, received four offers on Die Tech’s design and manufacturing facility at 2457 Waldorf Court NW in Walker, and with Die Tech’s permission, authorized the sale to an unnamed buyer for $1 million. The sale is expected to close in May.
Die Tech plans to downsize to a smaller space and “limit its operations to providing contract labor to its customers” going forward, Darby says, which he believes will return the company to profitability.
Darby also filed an ex parte motion to ensure employees would be paid pre-petition wages, salaries and other compensation, as well as receive employee benefits and tax withholdings.
He also filed a motion to prevent interruption of utilities, as he says Die Tech is “current” on payments to all providers.
A hearing will be held today regarding the debtor’s motions.
Attorneys John Piggins and Rachel Hillegonds, of the law firm Miller Johnson in Grand Rapids, are representing Die Tech Services in the case.
Judge John Gregg is presiding.
Die Tech Services
Founded in 2002, Die Tech is a tool and die business founded to provide skilled labor and tool and die sourcing and related services to automotive OEMs and tier-one and tier-two suppliers throughout the U.S. and abroad.
In 2009, the company began manufacturing inspection fixtures and gauging at its Walker facility.
In 2011, it added a “special machines” division that develops, designs and builds custom tooling for its customers.