Critical service provider files for Chapter 11 bankruptcy
The market leader provides a service you almost certainly use even if you don't know the bankrupt brand's name.
When a retailer goes bankrupt, observant customers generally know what's happening. You might see shelves that are more bare than usual or notice that common items or sizes are gone.
Sometimes people know when a public-facing business has money troubles because the company makes cuts in unexpected areas. Maybe hours get shortened or finding a staff member to answer your questions is harder.
Related: Popular travel retailer files surprise Chapter 11 bankruptcy
In all cases where a business hopes to continue operating, it needs its customers to believe that everything will be okay. That's especially true after a Chapter 11 bankruptcy filing, where survival depends on people believing that the brand will be there to process returns or service any past purchases.
If a customer thinks that a brand runs the risk of moving from a Chapter 11 bankruptcy filing into a Chapter 7 liquidation, they may stay away. For a retailer that means sales will fall and the end will become inevitable. The same logic applies to companies that provide a service.
If customers believe that the future is in doubt, they will find other providers. That's why Strategic Materials, the largest glass recycler in the U.S., has tried to stress that despite its Chapter 11 bankruptcy filing, the company will continue normal operations. Image source: Pixabay
Huge recycler files prepackaged bankruptcy
People, and even companies, rarely think about the company that processes their community's recycling. That changes if the provider can't provide those services and unprocessed recycling piles up.
Recycling is one of those behind-the-scenes things, like trash pickup and the sewer system, that people think about only when something goes wrong. If, however, they think something might go wrong in any of those critical areas, they might make a preemptive change.
That why Strategic Materials Inc., North America's largest glass recycler, has been very careful in presenting its Chapter 11 bankruptcy filing.
"SMI and certain of its U.S. domestic subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas," it said in a news release.
"During the restructuring, the company intends to operate in the ordinary course of business without disruption."
The company also said in the news release that its prepackaged bankruptcy plan is supported by 100% of voting financial creditors
SMI provides a crucial service
In addition to being the largest recycler of glass in the U.S., SMI also recycles plastic and other materials
"We convert recyclable materials into valuable products, helping industrial manufacturers increase operational efficiency," the website says.
"Our materials are utilized to create a wide range of products used in daily life, including fiberglass insulation, food and beverage containers, reflective materials, and other consumer and industrial products."
SMI has secured $23 million in new money commitments subject to court approval, for a debtor-in-possession financing facility from existing lenders to support its business operations. The loan will enable Strategic Materials to continue operating normally, which includes paying vendors and employees.
The restructuring plan will lower the company's debt by more than $300 million if everything goes according to plan.
"We play a critical role for the customers and communities we serve," said Chief Executive Chris Dods. "The past several years presented significant operational and financial challenges, requiring a comprehensive restructuring of the balance sheet of the company."
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