Canadian Plastics

Letter to the Editor: Collins & Aikman bankruptcy:Adding insult to injury

Canadian Plastics   

Dear Canadian Plastics,

Dear Canadian Plastics,

Certain actions following the bankruptcy of Collins & Aikman (C&A) in May 2005 that affected the company I work for, Plastmade Industries Inc., draw attention to a flaw in Chapter 11 legislation that I believe your readers should be made aware of.

It’s not enough that Plastmade wrote off 100 per cent of our invoices outstanding at the time of C&A’s Chapter 11 filing, but we are now being sued for “alleged preferential transfers” that occurred during the 90 days prior to the Petition Date (the filing date is actually backdated by 90 days).

It would appear that the intent of Chapter 11 — and I’ll assume The Companies’ Creditors Arrangement Act (CCAA) — is for all suppliers to provide goods and services for free, for about a quarter of a year. Was it the intent of legislators to reward mismanagement by punishing third party suppliers? Given that many, if not all, of C&A’s customers increased their purchase prices and /or advanced loans to C&A as a result of the filing, why was this not enough of a financial boost to right this listing ship? What exactly have the bankruptcy costs been for the past few years and what exactly have been the results of this likely very expensive process?


I fail to understand how any company’s financial difficulties should legally be transferred to arm’s length third parties, such as us. Suppliers bear a disproportionate share of the financial responsibility in such circumstances. Bankruptcy legislation both in Canada and the U.S. is in desperate need of review. The current process seems to take too long, is too costly and punishes those least responsible for a company’s misfortunes, however caused.

It’s my understanding that the CCAA is actually even worse in some respects. I understand that several suppliers who were required by the court to continue supplying ELS Plastics Corporation in Windsor, Ont. while under CCAA protection, had to subsequently write off invoices a second time when ELS could no longer pay its bills and was subsequently liquidated. While I have no reason to suspect any “foul play” (the obligatory “CYA” line) in any way in either of these two cases, the current solution is not working. We should all be mad as hell and resolve not to take it anymore.

Maybe we need Al Gore or Michael Moore to make a film about this.


Troy Chatfield


Plastmade Industries Ltd.

Mississauga, Ont.


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