Zeta files for bankruptcy protection
Zeta Consumer Products Corp., which owns the Tucker Housewares Division plant at the Kingman Airport Industrial Park, announced on Wednesday that it had filed for bankrupcty protection.
Zeta, based in Little Falls, N.J., filed for protection under Chapter 11 of the Federal Bankruptcy Code in U.S.
Bankruptcy Court in Newark, N.J.
The Tucker Division, headquartered in Leominster, Mass., manufactures plastic housewares, tote bags, trash cans and other merchandise for distribution to major retailers.
The company will act as "debtor-in-possession" during the bankruptcy, which means Zeta will retain control of its business and continue limited operations while it attempts to find a buyer for some or all of its plants.
Zeta also operates plants in Leominister, Arlington, Texas, and Macomb, Ill.
Subject to bankruptcy court approval and satisfactory loan documentation, Zeta's working capital lender has agreed to provide the company with $5 million debtor-in-possession line of credit to pay for limited operations during the bankruptcy, the company stated in a press release.
As of Wednesday, seven employees remained at the Zeta plant on Interstate Way in the airport industrial park, plant manager Marty Verville said.
He said he laid off 33 employees over the past month, and those still working are cleaning up the plant and shipping the finished goods.
Verville said he has no idea when the Kingman plant will close.
"It's in the hands of the (bankruptcy) courts," he said.
"We will have to wait and see what happens."
The bankruptcy filing came as no surprise to Bill Hoke, president of Kingman 2005 Inc., which serves as the economic development arm for the industrial park and the city of Kingman.
"It just means that they have finally come out publicly to say they need to liquidate some or all of the company assets to serve the debt," Hoke said.
"They need to pay off everybody."
Hoke, who worked in human resources at the plant before Zeta bought the division from Mobil Oil in 1996, continued, "I think it will probably be easier for everyone involved now that we know what the ground rules are.
We were unsure what their status was."
Zeta has not made a profit over the past few years because of intense competition in the consumer plastics industry, Stephen Hopkins, acting president, said in the press release.
"The company's problems were accentuated in recent months as the price of resin, the company's primary raw material, increased dramatically, and Zeta was unable to pass the cost increases on to its customers," he said.
Zeta board Chairman Alfred Teo told a Leominster-area newspaper April 8 that the company was liquidating the wholly owned Tucker subsidiary and would close its plants within a few weeks.
Teo was quoted as saying that GE Capital in Stamford, Conn., ordered the liquidations and closings because Zeta could not repay the financing company about $28 million in loans.
The 478,000-square-foot Tucker plant in Kingman reopened, with a reduced production schedule and staffing, in mid-October 2 1/2 months after Zeta laid off most of the 110 employees.
Verville said at the time that staying open, expanding production and increasing staff depended on the company's efforts to reduce its electricity bills and get the industrial park annexed to the city to reduce its property taxes
Zeta announced in May 1999 that it would lay off the 110 employees.
At the time, Verville blamed electricity costs and property taxes.
Verville has said that he will work with the Arizona Department of Economic Security to find other jobs for displaced Tucker employees.