The company now has access to more cash to operate and is close to an agreement with its largest and most significant supplier of materials.
U.S. Bankruptcy Judge Shelley D. Rucker approved a final order which allows the company to access a $2 million line of credit to continue operations as it extends its efforts to reorganize finances.
Hardwick filed for bankruptcy Dec. 2 after the Pension Benefit Guaranty Corporation informed the company it expected a payment of $4.6 million within days of its notice to the company to cover liabilities related to the company’s termination of its pension plan.
Hardwick said it had tried to establish communications with PBGC in order to work out an arrangement; however, PBGC responded with a press release saying the company was not being cooperative.
The new order increases an interim judgment entered last month which allowed Hardwick to enter into an agreement with Keltic Financial Partners II, LLC.
Initially, the terms allowed for Keltic to become the “debtor in possession” while providing a $1 million line of credit for the company.
Ruckner’s newest ruling allows that credit amount to be doubled.
Initially, the U.S. Bankruptcy Trustee, Samuel Crocker, had filed a “limited objection” to alowing Hardwick to incur the secured credit.
Crocker’s objection, filed the same day as the Dec. 30 interim order, listed a $1,500 monthly collateral management fee to Keltic as one of its major problems with the deal.
However, Kimberly Swafford, the attorney representing Crocker, said during Thursday’s hearing that “the concerns have been resolved and the objections withdrawn.”
During the hearing, Hardwick President Tommy Hopper testified the terms offered by Keltic were “the best available” and added the $2 million would be “more than sufficient for operations to continue.”
He also testified that there were no layoffs planned.
“Actually, we’re hiring,” Hopper told the judge.
Carmin Chastain, treasurer for Hardwick, provided testimony to amplify that of Hopper’s.
She added the company had only used $118,000 of the available credit since the Dec. 30 order was signed and projections were the company would use a total of $700,000 through the end of the year.
Chastain also noted the company’s latest sales have exceeded projections.
Hopper has previously stated the company was not in debt, but since filing for bankruptcy it has required the company to pay up front as opposed to using standard billing processes with providers.
The new line of credit provides the cash needed to satisfy those providers of materials and services who prefer to work with companies in the bankruptcy process that way.
One of Hardwick’s most significant suppliers now appears ready to work with the company, if the court allows.
A hearing will be held Feb. 13 in the U.S. Bankruptcy Court in Chattanooga to ask the court to allow an agreement between Hardwick and Burlington Worldwide, Inc.
Burlington is Hardwick’s largest single supplier of the piece goods materials used in its manufacturing operations.
Hardwick has filed an estimate stating the Burlington materials make up 62 percent of the piece good purchased.
Before the bankruptcy filing, Burlington had allowed Hardwick 60-day credit terms for purchases.
Burlington is now willing to restore those terms if Hardwick can resume paying pre-bankruptcy invoices as they come due and pay them in full “upon repayment terms [stated in the proposed order].”
Those terms call for Hardwick to pay pre-bankruptcy invoices totalling approximately $352,752.23.
Hardwick would pay the amount in six installments of $58,792.04.
Burlington says in the agreement if that payment is made it will allow Hardwick to order $250,000 on credit of necessary material.
Hardwick would then be allowed to pay for current shipments of goods on an up-front basis for the first two months, 30-day credit in months three and four, the 60-day credit during months five and six.
“This is just a process,” Hopper told the Banner after the Thursday hearing. “We are pleased with how it has gone so far.”
He said production is continuing as normal at the Cleveland plant and sees no reason to be other than optimistic.
“We very much appreciate the support of the community, the customers and our employees as we go through this process,” Hopper said.
Hardwick currently employs 235 and Hopper reaffirmed his testimony saying the company is currently advertising for more help.
“Cleveland is such a dynamic market,” Hopper said. “That is a great thing for our community, but it reduces the employment pool for us.”