Bankruptcy trustee refuses Hallmark Technologies deal
An offer by an American businessman to purchase bankrupt Windsor, Ont.-based moldmaker Hallmark Technologies fell t...
An offer by an American businessman to purchase bankrupt Windsor, Ont.-based moldmaker Hallmark Technologies fell through last week after the court-appointed receiver failed to accept the deal.
Robert Kattula of Rochester, Mich.-based US Industrial Services offered $8.8 million to the receiver, with an additional $3 million to upgrade the equipment at the facility. The businessman has experience in turning manufacturing companies around, and has previously owned a tooling company in North Carolina.
The entrepreneur also provided a letter from his Chicago-based bank showing that he had been approved for a $7.5 million loan.
“I could run the company and run it pretty well,” said Kattula. “But unfortunately, they didn’t give us a chance.”
Kattula set a deadline for last Tuesday because many of Hallmark’s former customers said they were willing to wait until then before moving their work to other operations. The offer expired after he did not receive a response from the company’s trustee, Grant Thornton Ltd. in Toronto. According to Kattula, Hallmark’s previous customers have now moved their work to companies in the United States and overseas.
Grant Thornton’s corporate recovery and insolvency vice president Jonathan Krieger confirmed that the trustee had chosen not to accept the offer by Kattula, and said details of the decision would be disclosed “in due course.” Krieger also refused to comment on whether any other offers had been made for Hallmark.
Hallmark closed its doors on February 15 after citing irreconcilable debt. In its official statement of affairs, the company made note of approximately $10 million in debt to secured creditors. Hallmark was also unable to pay its 331 unsecured creditors, who were owed almost $35 million.
Although the unsecured creditors would not have benefited from Kattula’s proposed deal, he had promised to pay any outstanding vacation amounts to the company’s former employees. The deal would have also allowed 150 workers to return to their jobs at the closed facility.
“I thought it was a fair offer, but the receiver is acting in the companys interest,” said former Hallmark president Todd Latouf. “I think right now they are in liquidation mode, and I think they are liquidating assets as we speak.”
Kattula said he was disappointed by the receiver’s decision to reject his offer, and felt that there was still hope for the moldmaker’s operations.
“It’s puzzling to me why anyone prefers a shut down versus operation, it doesn’t make any sense to me,” he said.
The first meeting of the creditors of the bankrupt organization is scheduled to take place on March 9 at a Windsor area hotel.