A Chicago-based scrap metal recycling company has recently filed for Chapter 11 protection. As a result of the filing, the company will be selling a large portion of its assets to a rival scrap recycling firm, clearing out its $28 million in unsecured debts and reorganizing as a much smaller outfit. The firm had hoped to avoid Chapter 11, but was required to file as part of the deal to sell their assets.
The Chicago-based company has facilities in several other U.S. cities, and all these facilities will continue to operate during the Chapter 11 procedure. The firm that is purchasing most of the company’s assets required Chapter 11 restructuring as part of the purchase deal, making the filing slightly unusual. Sources close to the bankrupt company say that industry professionals had been expecting a Chapter 11 filing for some time, based on numbers that continued to grow more unbalanced for the company as scrap metal prices sunk. The company still expected to be able to recover without bankruptcy, but decided to appease its major buyer in order to get the deal done and get clear of their debts, which have topped $28 million.
According to the bankruptcy attorney, the company has been suffering since the price of nickel started plummeting in recent years. Nickel is a main component in the types of metals the company recycles to resell; when it became less valuable, so did the company, which has struggled ever since and never fully recovered.