The chief executive officer of American LaFrance's lead investor spoke out Tuesday for the first time about the vehicle manufacturer's financial woes, saying that Monday's bankruptcy filing was part of a fast-track plan to secure the future of the 176-year-old company.
Lynn Tilton, CEO of the New York private equity firm Patriarch Partners, said the bankruptcy process will keep the Summerville-based fire-truck maker afloat and give management a chance to regroup.
"The purpose of the filing is to insure the future of American LaFrance, its employees, its heritage and its great products," Tilton said.
In court documents, officials blamed many of the company's financial troubles on problems caused by a disastrous changeover in computer systems that keep track of parts and perform other key administrative functions. They also said the company's move last year from North Charleston to a new plant near the Jedburg area threw off the production schedule.
The first hearing in the bankruptcy was set for Tuesday in Wilmington, Del., where a judge was expected to approve $50 million in fresh financing. A Delaware attorney who represents American LaFrance referred questions about the hearing to company executives, who did not respond to requests for comment Tuesday.
The company said in a statement that it would file a reorganization plan with the court within the next few days and that it hopes to emerge from bankruptcy within two months. It expects the majority of its more than 1,000 creditors, who are owed more than $200 million, to support the restructuring.
Tilton said she and other officials worked for weeks on the Chapter 11 bankruptcy filing in anticipation of "a fast-track reorganization of this great American company."
American LaFrance noted that the U.S.
Bankruptcy Code "allows the company latitude to deal with issues and to find solutions to problems that are otherwise not available ... in an out-of-court restructuring."
The reorganization will address numerous problems that have been hurting the company's bottom line, Tilton said. Remedies could include closing unprofitable locations, quickly raising capital, terminating leases and rejecting unprofitable contracts.
American LaFrance, which lost $104 million over the past two years, has faced lawsuits recently.
At least two local contractors have filed suits in Charleston County, alleging that they have not been paid for work valued at about $120,000.
Also, Freightliner LLC, which owned American LaFrance until late 2005, alleges that the company owes it $10 million for computer and administrative services.
Meanwhile, American LaFrance's previous landlord, DaimlerChrysler AG, is suing to recover about $511,000, saying in its lawsuit that the company was late in vacating the North Charleston plant and left some bills unpaid.
Through a spokesman, Tilton has declined interview requests from The Post and Courier in recent weeks. Company executives offered Monday to respond to questions submitted in writing, but no answers were provided Tuesday.
American LaFrance said this month that a temporary layoff of about 100 of its estimated 500 Summerville workers had been extended because the company didn't have the parts it needed to assemble fire trucks. Before filing for bankruptcy, the company approached at least three lenders about financing the purchases, but all three declined the proposals, court documents said.
American LaFrance said this week that it hopes to recall all furloughed local employees by March 10.