COOPERSVILLE — A West Michigan-based environmental consulting firm has filed for Chapter 11 bankruptcy as it positions to sell the company to an industry competitor.
Superior Environmental Corp. filed with the U.S. Bankruptcy Court in the Western District of Michigan on Feb. 25 under Subchapter V of the federal bankruptcy code, a variation of Chapter 11 designed to expedite the process and make it more accessible for small to mid-sized companies.
Based in Coopersville, Superior Environmental cited extreme staff turnover and hardships associated with the COVID-19 pandemic as reasons for dwindling revenue. The company also faces a $584,000 payment under a judgment in a lawsuit filed by a former client.
In the bankruptcy filing, Superior Environmental claimed $1.29 million in liabilities compared to $1.28 million in assets. The company employs 18 full-time and two part-time workers in addition to using a variety of contractors. Its biweekly payroll totals around $42,000.
In a sworn statement filed on Feb. 28 on behalf of Superior Environmental Chief Operating Officer Jeff Skendrovic, who has been with the company for 32 years, the company outlined how it plans to liquidate before selling its non-cash assets to Saginaw-based AKT Peerless Environmental Services LLC for $250,000 via a Section 363 sale.
In the statement, Skendrovic said the company’s board of directors shopped around for a strategic buyer and has received a letter of intent from AKT Peerless. Skendrovic wrote that he anticipates a quick closing of the sale and that AKT Peerless would have the option to hire Superior employees while also assuming existing projects, including accounts with companies such as AT&T, the state of Michigan and nationwide convenience store chain Casey’s Retail Co.
Barrage of hardships
At its peak, Superior Environmental brought in $7.5 million of revenue in 2016. This dwindled to $2.67 million in 2021 and $114,147 so far in 2022, up to the bankruptcy filing.
Skendrovic’s sworn statement outlined a variety of obstacles that tripped up the company since having a banner year in 2016.
In 2017, staff at the company’s Bay City office all left to work for a competitor, dealing a major blow in revenue for Superior, which operates offices in Michigan, Connecticut and Illinois.
The company also cited pandemic-induced market pressures as a reason for plummeting revenue, including inflation, talent shortages and the fact that — for a period of time — Superior could only move forward with projects for businesses that were deemed essential during times of shutdown.
The final blow to the company’s solvency came as a result of a 2018 lawsuit filed by former client C.A. Murphy Oil over an alleged breach of contract, according to the filing. The allegations stemmed back to the 1990s.
That case came to a resolution in 2021, when a judge awarded Murphy $584,000. After the legal decision, several key staff members turned in their resignations, including key personnel from Superior’s Connecticut office and the company’s CEO.
The ruling left Superior Environmental looking for a strategic buyer, claiming that selling would allow parties with secure priority claims to be paid in full. Parties with unsecured, non-priority claims also are expected to receive distributions of more than 50 percent.
In addition to a number of sub-$15,000 unsecured claims by members of Superior’s ESOP for vested stock payouts, the top unsecured creditors include Murphy Oil ($584,000), the U.S. Small Business Administration ($43,347) and Bowling Green, Ohio-based Environmental Recycling Group ($21,094).
On Tuesday, a judge responded to Superior’s emergency motion, granting the company the right to use cash collateral to pay employee obligations and continue employee benefits programs. The company will continue paying salaries, rent and utilities, anticipating a small loss between filing its petition and selling the business.
Attorney Steve Bylenga of Grand Rapids-based CBH Attorneys & Counselors PLLC is representing Superior Environmental and declined to provide additional comment on the case.