Supply chain issues push auto supplier to file for bankruptcy


Michigan-based injection molder Instaset Plastics Co. LLC filed for bankruptcy in an effort to stay afloat long enough to be sold to an injection molding company on the west side of the state.

The automotive plastics supplier, whose sales have been eroded by a host of supply chain issues, is seeking bankruptcy protection under Chapter 11 Subchapter V, according to the petition in US bankruptcy court in Detroit.

The company, based near New Baltimore in the northern suburbs of Detroit, is cash-strapped and is aiming to secure another loan from a creditor to continue operations until it is taken over by Clarion Technologies Inc. based in the Netherlands. The process, known as a 363 sale, should be complete by Oct. 31.

“A potential disruption of services would be devastating to the debtor’s ability [to] enforce its enforceable contracts and maximize the value of its assets and successfully liquidate it as a going concern,” the petition reads.

The company could not be reached for comment. Strobl Sharp PLLC, which is representing it in the bankruptcy case, did not return a request for comment.

The bankruptcy filing is the result of half a dozen years of financial problems for the company, which supplies plastic parts, such as interior door handles, for OEMs such as General Motors Co. and Ford. Motor Co.

Since its peak in 2015, when the company was acquired by WGS Global Services, annual sales have declined by more than 70%. Its sales this year totaled $4.9 million last week.

Like most auto suppliers, Instaset’s profitability has been hit over the past two years due to rising costs and difficulties in recouping customer losses.

“As of late 2021, the debtor failed to obtain price increases from its customers to offset the impact of increased labor and raw material costs,” the filing said.

The company’s struggles predate the pandemic, however. It lost significant market share in 2018 when GM announced the closure of its plant in Lordstown, Ohio, and when an explosion at the Meridian Magnesium Products of America plant in Eaton Rapids halted production of the Ford F-150, interrupting truck supply deliveries. chain.

Just as operations were beginning to stabilize, the company said, the pandemic shutdown reversed its progress. In May 2021, the company was acquired by Christopher Goetz.

“The cumulative effect of labor and supply chain shortages as well as rising raw material costs weighed [Instaset] with significant debt and without adequate means to generate sufficient revenue to continue to meet customer needs,” according to the petition.

Subchapter V is an increasingly popular way for small businesses to restructure. Filing for Sub-Chapter V is less expensive and takes less time than a traditional Chapter 11 filing, making it an attractive option for businesses that are cash-strapped and need a faster solution. as in the case of Instaset.

According to the filing, Instaset’s assets total $1.3 million, with only $9,974 in cash. She owes $557,311 to Huntington Bank and $692,745 to WGS.

The company agreed to a sale to Clarion for $250,000, according to the petition. Additionally, the company has reached an agreement for an $800,000 loan from WGS to allow it to continue operations and keep 50 employees on the payroll until the assets are transferred to Clarion.

“Without the power to use cash collateral, the debtor will not have the working capital necessary to operate, pay employees, or maintain operations necessary to protect the assets from bankruptcy,” the petition states.

Clarion Technologies has factories at its headquarters in Holland and Greenville, Michigan. Plastics News estimates its 2021 revenue at $65 million.

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