By Patrick Cronin
Hampton Union, Tuesday, April 11, 2006
[The following article is courtesy of the Hampton Union and Seacoast Online.]
HAMPTON - The bankrupt Foss Manufacturing could be sold for $39 million to Foss Manufacturing LLC, a Nevada limited liability company.
Trustee Patrick O'Malley, who has run the company during its bankruptcy proceedings, filed documents asking for the bankruptcy judge to approve the purchase agreement.
A hearing on the matter is scheduled for April 28.
According to the Nevada Secretary of State's office, Foss Manufacturing LLC was created on March 27. A list of officers is due to be submitted by April 30.
The sale, if approved, provides for continuation of the company, which manufactures nonwoven fabrics and synthetic fibers, and the continued employment of 355 employees. Foss Manufacturing LLC is purchasing all of the company's assets except for all securities of Foss Manufacturing Europe.
It also pays off all secured claims, administrative expenses and $300,000 in cash to wind down operations, according to court documents.
"The sale is the highest and best offer the trustee has received for the debtor's assets," O'Malley stated in court documents.
CapitalSource is providing Foss Manufacturing LLC with finance for the purchase of the company, which will continue to operate in Hampton.
The sale comes just seven months after the company filed for Chapter 11 bankruptcy protection.
Foss Manufacturing filed for bankruptcy last September after its chief lender, CapitalSource, cut off credit, alleging the company fraudulently borrowed millions of dollars to benefit itself and company insiders.
According to the bankruptcy filing, the company estimated assets of $10 million to $50 million and estimated debts in the same range.
Creditors stated in a court document that company money was used to pay for home improvements, club memberships and use of the company's private jet. Creditors alleged former CEO Stephen Foss use company money as his "personal piggy bank."
Foss resigned from the company in August after allegations of fraud came to light.
O'Malley was appointed trustee in October after the board of directors requested a trustee to run the company because of friction between it and CapitalSource.
Since then O'Malley has been actively marketing the company, which included inquiries from 90 potential buyers.
With facilities in North America, Asia and Australia, Foss is a significant supplier to the Automotive Technical, Decorative, Fibers and Retail industries worldwide.