Alloy Trailers seeks court approval of sale
Alliance LLC would buy local companys assets for $2.2 million to $2.8 million
Kim CromptonAugust 13th, 1998
Financially struggling Alloy Trailers Inc., of Spokane, is seeking U.S. Bankruptcy Court approval here to sell its assets to California-based Alliance LLC for between about $2.2 million and $2.8 million.
A hearing on the matter is scheduled for today before Bankruptcy Court Judge John M. Klobucher.
Spokane attorney Dan ORourke, representing an unsecured creditors committee in Alloys bankruptcy case, has filed a partial objection to Alloys proposal. He argues that a procedure should be set up to allow other interested parties to inspect and make an offer on the companys assets. He further contends that Alloy should be required to accept the greatest cash offer received that meets certain minimum criteria.
Alloy, which filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code about two months ago, claims in court documents that Alliances offer is the best offer it has received to date.
It is imperative that the sale be approved now so that (Alliance) may close the sale on schedule (Oct. 1). If the sale is not approved now, the buyer will stop investing resources in this sale and will seek other opportunities, Alloy contends.
If the sale is allowed to proceed, Alloy says it expects 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, the vast majority of the proceeds of the sale should be available to pay unsecured claims, it says.
Alloy listed assets of about $5.7 million and liabilities of about $11 million in its Chapter 11 filing. Virtually all of its assets currently are encumbered by liens granted to Fleet Capital Corp., which is Alloys secured lender and was owed about $3.7 million by Alloy as of about a month ago.
Alloy claimed, at least until a recent downsizing, to be one of the two largest remaining full-line manufacturers of over-the-road truck trailers in the Western U.S. Over about the last 10 months, 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 1997 fiscal year. That was down from a reported $72 million in 1995.
Alliance LLC is the name used in bankruptcy court documents for an entity being formed by 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, whereas Alloy makes trailers mostly for the over-the-road freight market.
J. Kingsley Novell, recently retired CEO of Alloy Trailers, is a longtime friend and business associate of Brian Lings father, Don Ling. Novell employed Brian Ling here for a brief period during the 1980s, and Novells son, John, in turn worked for a time for the Ling family at a Reliance facility in California.
A California business newspaper reported last month that Ling and Yolo plan to form a new company, called Alliance Trailers, which would manufacture trailers under both the Alloy and Reliance names. In an interview a couple of weeks ago, however, Ling said the name of the new company hadnt been decided.
Due partly to limited space and higher labor costs in Californias Sonoma County, Ling says he and Yolo might look at moving some of Reliances production to Spokane from there, assuming their purchase of Alloys assets is approved.