Workers leaving Armstrong Flooring’s municipal warehouse in Lancaster on Thursday said they were frustrated and confused after the company’s bankruptcy sale was postponed for the second time.
Workers at the Loop Road plant, who declined to give their names, said they had heard nothing from the company and were frustrated by the continued uncertainty over the company’s 606 jobs in Lancaster County since filing for Chapter 11 bankruptcy on May 8.
Meanwhile, attorneys for Armstrong Flooring Inc. revealed little in Delaware bankruptcy court on Thursday, not saying why it postponed its sale hearing to Tuesday. The sale hearing – at which Armstrong Flooring was supposed to present the offer it wanted to accept for the business – had been scheduled for Thursday. Lawyers, however, hinted on Thursday that the sale could be to someone who would continue to operate the business.
Judge Mary Walrath said the sale hearing had been adjourned until Tuesday so that the details of Armstrong Flooring’s proposed sale “can be finalized”.
It was the second postponement. On June 29, the company postponed a sales hearing until Thursday because it was unhappy with the offers received.
At Thursday’s hearing, a lawyer for the company said the team had resolved union objections to the end of collective agreements and retiree benefits. The resolution was accepted by attorneys for United Steelworkers and the International Association of Machinists and Aerospace Workers, and would be subject to an operating sale, which will be discussed at Tuesday’s hearing. Details of the resolution were due to be filed in court by Tuesday. A going concern sale is a sale to a party that would continue to operate the business instead of liquidating its assets.
The company also deferred discussion of objections to a retention bonus plan for about 50 mid-level executives to Tuesday’s hearing.
Richard Seltzer, lawyer for United Steelworkers, confirmed that an agreement had been reached. He called the bankruptcy a very difficult case and said the unions were in favor of a long-term sale. Unions had proposed Wednesday to end insurance coverage on an employee’s last day rather than July 31.
Walrath said she met with the company’s attorneys, the creditors’ committee and its lenders privately before the hearing.
The lawyer for the non-union pensioners committee said the committee had not resolved its objections to the sale and also expressed concern that as an advisory party it should have been included in the discussions with the judge before the hearing.
An attorney for Givens Inc., the Virginia-based company that provides warehouse space for Armstrong Flooring, said issues have yet to be resolved regarding the inventory it holds.
Hearing changes among other developments
Thursday’s hearing, originally scheduled for 11:30 a.m. and then pushed back to 3 p.m., was originally scheduled to be a sale hearing in which Armstrong Flooring would present its plan to sell or close to the bankruptcy court. The company had indicated that it would not have the financial means to continue its current operations last Thursday. No explanation was given in court Thursday on how the company would finance its operations until Tuesday’s hearing.
Before Thursday’s hearing, the court had admitted attorneys for companies that had not previously been involved in the 2-month bankruptcy proceedings: AHF Products, a flooring company based in the township of West Hempfield, and Gordon Brothers, a Boston-based global advisory firm known for liquidating assets.
A source said a mandatory meeting of all AHF workers was announced Thursday, then canceled in the afternoon around the time Armstrong Flooring filed papers with the court indicating that the hearing would be transformed into a hearing on the status of a sales hearing.
There are approximately 1,200 Armstrong Flooring employees nationwide, including approximately 606 in Lancaster County where it is headquartered and operates a manufacturing plant and warehouse.
Approximately 215 employees work at Armstrong Flooring’s municipal facilities in Lancaster on Dillerville Road and Loop Road, and the remainder work, are assigned to or report to Greenfield’s head office on Hempstead Road in East Lampeter Township.
The sale of the business should be approved by Walrath. There have been several objections to a sale from labor unions and companies such as High Companies, which holds the lease of Armstrong Flooring’s headquarters.
A sale would allow the company to pay its secured creditors, Pathlight Capital and Bank of America NA, which owe $98 million and $65 million, respectively. Pathlight and Bank of America would also be repaid for a $24 million loan that allowed Armstrong Flooring to file for bankruptcy and sell it. It is not clear if all the money was spent over 60 days.
Other priority payments would include administrative expenses and pre-bankruptcy bonuses promised to executives. It’s unclear how much, if any, scores unsecured creditors or shareholders would receive.
Unsecured creditors outside the company range from the highest claim of Klockner-Pentaplast of America Inc., which says it owes more than $4.3 million for plastic films used to make luxury vinyl flooring, to employees claiming unspecified amounts from their employee stock ownership pension plan. and shareholders with as few as 10 shares.
The company owes about $318 million, including $160 million in long-term debt. He previously received court approval to sell his assets which he values at $517 million.
Armstrong operates seven manufacturing plants in three countries. Two factories are in Pennsylvania, one in the city of Lancaster and one in Beech Creek Township, Clinton County, which employed approximately 35 people. There are factories in Illinois, Mississippi, Oklahoma and a factory in China and Australia.
The factories in China and Australia are not part of the bankruptcy but are for sale. Assets also include trademarks and intellectual property.
Writers Ashley Stalnecker and Sarah Pellis contributed to this report.