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Walker-based Die Tech Services Inc. filed for Chapter 11 bankruptcy protection on March 5 in the U.S. Bankruptcy Court for the Western District of Michigan. Walker-based Die Tech Services Inc. filed for Chapter 11 bankruptcy protection on March 5 in the U.S. Bankruptcy Court for the Western District of Michigan. COURTESY PHOTO

Walker-based Die Tech Services files for Chapter 11 bankruptcy

BY Friday, March 08, 2019 02:35pm

WALKER — Die Tech Services Inc., a West Michigan-based manufacturer of dies and checking fixtures that also supplies contract labor to manufacturers, has filed for Chapter 11 bankruptcy.

Die Tech is seeking bankruptcy protection while it pursues potential strategies for a return to profitability, according to filings this week in the U.S. Bankruptcy Court for the Western District of Michigan.

[RELATED INDUSTRY NEWS:  Walker-based Taylor Tooling Group files for Chapter 11 bankruptcy]

Kelly “Casey” Darby, president of Die Tech, told MiBiz the Walker, Mich.-based company aims to sell off its real estate and parts of the business in an attempt to restructure and right-size the operations.

“We’re planning to restructure the company, so we’re going to stop building stamping dies in our facility, and we’re downsizing,” Darby said.

The bankruptcy mostly “has to do with the die business” and the fact that “no dies are being released,” he said.

“It’s a slow period right now. It started slowing down last June for us. Orders went way down,” said Darby, adding the majority of the company’s business is “automotive related.”

A sale of the company’s Walker facility — owned by a related entity — is currently pending and is expected to close by May 2019, Darby said.

Die Tech put its “check-fixture business up for sale,” he added.

According to court filings, the company has liabilities between $1 million to $10 million, with assets valued at $500,001 to $1 million. Die Tech estimates that it has approximately 98 creditors, including active employees.

Darby owns a 60-percent interest in Die Tech, with the remaining 40 percent held by Ronald Bourque, the company’s vice president and treasurer.

The bankruptcy filing comes about a year after Die Tech refinanced a majority of its debt with Illinois-based Byline Bank, the company’s primary creditor — a move predicated by former primary lender Chemical Bank freezing a line of credit.

At the time, the company said monthly debt load from other high-interest loans “was putting strain on Die Tech’s ongoing cash position,” according to court documents.  

Die Tech owes Byline Bank approximately $2.2 million for a loan that is secured by all of its assets and the assets of related real estate holding company, DTS Holding LLC. Die Tech leases its headquarters from DTS Holding, which is owned equally by Darby and Bourque.

After securing the loan from Byline Bank, Die Tech’s manufacturing business continued to erode, leading executives in January 2019 to hire investment banking firm Invictus Capital Advisors LLC, which sought buyers for the business and real estate.

According to the court documents, the amounts owed to Byline Bank “far exceed” the value of its assets. The sale of the building could reduce the companies’ loan obligations to Byline Bank by approximately $1 million, Darby said in an affidavit filed with the court.

A sale also would leave Die Tech without a space for design and manufacturing work, limiting its operations to providing contract labor and significantly reducing overhead expenses, according to the filing.

Darby thinks the move could help return the company to profitability.

“We may lease back part of this building from the new owner,” Darby said. “That hasn’t been determined yet, but they’ve mentioned that that is available to us.”

A significant amount of Die Tech’s remaining debt is owed for goods and services from other companies in the region. Among the top unsecured creditors are Walker-based Precision Wire EDM Service Inc. ($61,948), David Carl Machining LLC in Sand Lake ($25,771), Zeeland-based Custom Tooling Systems Inc. ($24,575), and Grand Rapids-based Ajacs Die Sales Corp. ($17,636).

Additionally, the court documents indicate that Die Tech owes approximately $480,000 in tax obligations to the federal Internal Revenue Service and the state of Michigan.

Die Tech also requested protection from the interruption of utility services and the authority to pay its 20 full-time employees back pay and benefits.

U.S. District Court Judge John Gregg is presiding over the case. Die Tech is represented in the case by Grand Rapids-based law firm Miller, Johnson, Snell & Cummiskey PLC.

Read 6183 times Last modified on Wednesday, 20 March 2019 13:22