MUSKEGON — Pace Industries LLC, which manufactures die-cast parts and previously acquired the former Port City Group operations in Muskegon, filed for Chapter 11 bankruptcy this week.
The Arkansas-based company cited two years of financial difficulties coupled with supply chain disruptions caused by the outbreak of the coronavirus for forcing the company to close plants and lay off most employees, according to a statement.
Last month, Pace Industries notified employees at the company’s Port City division at 1985 E. Laketon Ave. in Muskegon that operations would be temporarily shut down and all but 38 salaried employees would be laid off. A total of 456 local employees were furloughed, according to a notice filed with the state.
The Muskegon plant, which Pace Industries acquired in 2015, manufactures aluminum die castings, zinc die castings, mechanical assemblies and injected molded plastics for the automotive industry.
“Over the past two years, we launched significant new programs for the automotive industry to further penetrate this important growth market and implemented a series of cost-saving initiatives to position our business for long-term success,” Scott Bull, CEO of Pace Industries, said in a statement. “Unfortunately, we were not able to realize the full benefits of these new programs and initiatives before the coronavirus weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants in the United States.”
The company, which had $560 million in revenue last year, initiated a prepackaged bankruptcy proposal that will convert the existing $232 million in senior secured notes into 100 percent of the equity in the reorganized company. The senior secured noteholders along with existing revolving credit lenders have agreed to provide commitments for up to $175 million in debtor-in-possession financing to help the company get through Chapter 11 proceedings.
Pace Industries expects to complete the process in the second quarter of 2020 and emerge “a financially stronger company that is well-positioned to succeed in the post-COVID-19 environment,” according to a statement.
A representative of the company did not respond to a request for further comment.