Layoffs have begun at First Brands plants as bidders for the beleagured company fail to pan out.
The company was up for sale after two former executives were implicated in a sweeping fraud case. It declared Chapter 11 bankruptcy in September. As it began the bankruptcy process, it secured more than $1 billion from lenders, but after burning through much of that, the company was unable to get more funding for its aftermarket businesses.
OEMs Ford, General Motors and Harley-Davidson stepped in to provide funding to keep business lines open that provide essential parts for their vehicles.
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A plant in Emporia, Kan., closed Monday, ultimately affecting 130 employees. Of those, 118 were let go immediately while a remaining 12 were assisting with closing down the Hopkins Manufacturing plant. A letter to the city of Emporia says the Hopkins facility will close permanently.
"As you may be aware, the company has gone to great lengths to avoid closing this facility," the letter says. "For the past several months, the company has been trying to obtain capital by selling the Hopkins business to a buyer that would be able to continue operations. ... Many potential bidders were interested in continuing the Hopkins business."
Announcing the closure any sooner than Monday would have jeopardized a possible sale of the plant, founded in 1953, First Brands says. It made towing products and accessories for the automotive and recreational vehicle markets.
One bidder in particular was fairly far into the process when it "suddenly and unexpectedly" withdrew its bid. No interest emerged afterward.
"Regrettably, in the absence of a sale, the company does not have access to capital markets or cash reserves that would allow operations to continue," the letter says.
In Illinois, First Brands closed its Midwest Distribution Center in McHenry on Feb. 3, laying off the vast majority of 389 workers the same day. It also announced Monday it was closing Champion Labs, a filter manufacturer in Albion, with the same sort of situation it reported in Kansas.
"It was a huge shock," Albion Mayor Wes Harris told a local news station. "I wasn't aware of any of this going on. They just sprung it on the families, which is very saddening and disheartening to hear that they're all having to go through this. It's going to be a huge loss for the community and a huge loss to everybody around as well."
The company is laying off more than 100 employees in Texas, mostly at Cardone Industries in Harlingen and Arlington. Cardone makes a variety of aftermarket parts, including for brakes, emissions controls and more. Those notices went out Feb. 3.
Law firm Strauss Borelli is investigating whether First Brands violated the WARN Act in announcing the Illinois layoffs.
