A U.S. Bankruptcy Court judge here has authorized the sale of the assets of Alloy Trailers Inc., of Spokane, to California-based Alliance LLC, essentially clearing the way for a financial rescue of the struggling trailer-manufacturing operation here.
Judge John M. Klobucher signed an order last month approving the sale of the assets and authorizing a partial distribution of sale proceeds to pay closing costs and money owed to Fleet Capital Corp. Virtually all of Alloys assets had been encumbered by liens granted to Fleet Capital, which was Alloys secured lender and was owed about $3.7 million by Alloy as of a couple of months ago.
Klobucher ordered that any remaining proceeds of the sale be held in an interest-bearing, government-backed account at U.S. Bancorp, pending further orders by the bankruptcy court.
The purchase and sale agreement indicates that Alliance will pay about $1.15 million for Alloys operating equipment and supplies, office equipment, and general intangibles, such as intellectual property, patents, copyrights, and goodwill. Alliance also acquired an option to buy property from Alloy on Geiger Road west of Spokane, where Alloys administrative and sales offices and a recently expanded service shop occupy a 105,000-square-foot building complex. Assets excluded from the sale included all trailer inventory, work in progress, accounts receivable, cash, and cash equivalents.
It wasnt clear from court documents whether the $1.15 million is the entire amount Alloy will receive from the sale of its assets. Any amount received from the sale of the property on Geiger would be in addition to the $1.5 million. Earlier filed documents had estimated the value of the companys assets at $2.2 million to $2.8 million.
Klobuchers ruling allowing the sale averted a potential liquidation of Alloy, a 37-year-old truck trailer manufacturing operation here, and appeared likely to preserve a large number of jobs that otherwise might have been lost.
Alloy filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code about three months ago. It claimed in court documents supporting the sale of its assets to Alliance that Alliances purchase offer was the best offer it had received.
The extent to which Alloys creditors will be reimbursed apparently remains to be seen, but Alloy said in court filings that it expected to retire most or all of the secured debt on its assets before the closing date of the sale, using revenue from its continuing manufacture and sale of truck trailers. As a result, most of the proceeds of the asset sale should be available to pay unsecured claims, it said. The sale is scheduled to close by Oct. 1.
Alliance LLC is the name used in bankruptcy court documents for an entity formed by California businessmen Brian Ling and Duke Yolo to take over the Alloy operation. Ling and Yolo own Redwood Reliance Peterbilt truck dealerships in Windsor and Eureka, Calif. The Ling family also is majority owner of Reliance Trailer Manufacturing Co., of Cotati, Calif., about 45 miles north of San Francisco. That company caters primarily to the construction market, such as trailers used for hauling sand, gravel, asphalt, and concrete, while Alloy makes trailers mostly for the over-the-road freight market.
J. Kingsley Novell, who retired earlier this year as CEO of Alloy Trailers, is a longtime friend and business associate of Brian Lings father, Don Ling.
Novell employed Brian Ling here for about a year during the 1980s, and Novells son, John, in turn worked for a time for the Ling family at a Reliance facility in California.
Brian Ling said in an interview about two months ago that he and Yolo would continue to operate the Spokane facility and might look at moving some of Reliances production to Spokane from California, due partly to limited space and higher labor costs there.
Before a downsizing in the last year, Alloy claimed to be one of the two largest remaining full-line manufacturers of over-the-road truck trailers in the Western U.S.
Since last fall, however, the company has discontinued about half of its trailer lines and has consolidated all of its production into space it leases in the Spokane Business & Industrial Park, due to financial woes caused by stiff competition from larger manufacturers and other factors. It also cut its work force to about 120 people, down from nearly 450 three years ago.
Bankruptcy court documents say the company had sales of about $38 million in its 1998 fiscal year, which was down from a reported $72 million three years ago in fiscal 1995.
Subscribe today to our free E-Newsletters!SUBSCRIBE