A manufacturer of precision parts for the automotive industry and other businesses sought bankruptcy protection this week, less than a year after a critical deal with a customer soured.
Summerville-based Bellwright Industries Inc. listed assets of $2.5 million and debts of about $8.8 million. It filed for bankruptcy Tuesday as a Chapter 11 case, meaning it plans to continue operating, though for the moment it is facing a severe cash shortage.
Company officials and their attorney did not respond to requests for comment Wednesday, but they are seeking an expedited hearing to free money to meet Friday's payroll. Otherwise, "the business operations will cease" and Bellwright will lose its workers, according to a filing.
Bellwright did not specify the reasons for the bankruptcy but noted sales skidded 21 percent, or more than $4 million, to $15.3 million over its past two fiscal years. The company acknowledged last year that it was in dire financial trouble.
In a lawsuit filed in U.S. District Court in Charleston in August, Bellwright alleged that a customer, Getrag Corp., backed out of an agreement that required Bellwright to make parts for General Motors Corp. and other companies. Bellwright said it had invested $6 million in equipment and took on more employees to meet its end of the deal.
Getrag pulled the plug around June
2007, according to the lawsuit.
As a result, Bellwright said, it and its founder and majority owner, Texas resident Andrew Wright, "suffered extreme economic hardship" and the company was forced to terminate some of its employees. It also said in its lawsuit that it was in "extreme danger" of being shut down.
Bellwright is seeking $30 million in damages in that case. Getrag has filed a countersuit, alleging Bellwright breached the agreement after hitting a financial rough patch in 2006.
Bellwright's bankruptcy filing was not unexpected, said Edwin O. Lesley, president of Business Development Corp. of South Carolina, a Columbia-based lender that is owed about $1 million.
Lesley said Bellwright hopes to move its reorganization through the courts quickly as "a prepackaged bankruptcy," one in which creditors and debtors negotiate a deal in advance to save time and legal expenses.
"We will work with them," Lesley said.
Bellwright has lined up some new financing with a lender called County Bank, which will allow it to continue operating if approved by the court.
The company's first meeting of creditors is set for May 1. The approximately 250 creditors include 77 current and former employees whose back wages total more than $110,000.