CarbonLite files for Chapter 11 bankruptcy
PET recycling company CarbonLite and a subsidiary filed for bankruptcy this week, saying the company plans to reorganize and continue operations. A business leader said conflicts in the market and the impacts of COVID-19 led to the decision.
Los Angeles-based CarbonLite filed for Chapter 11 bankruptcy in the U.S. District of Delaware bankruptcy court on March 8. The dossier covers all of CarbonLite’s operations, which include facilities in California, Texas and Pennsylvania. It also covers PinnPACK Packaging, a thermoforming production subsidiary. In total, 11 entities affiliated with CarbonLite filed for bankruptcy.
CarbonLite operates recycling facilities that bring in PET bales from drop-off and collection sources. The company processes PET and sells RPET pellets to large bottling companies, including Nestlé Waters North America and Niagara Bottling, both of which are listed in the bankruptcy petition as creditors with multi-million dollar claims. dollars (a list of top 10 receivables is less than).
CarbonLite has grown significantly in recent years, opening the Pennsylvania plant in early 2020 and planning a fourth plant in Florida.
The company declined an interview request from Plastics Recycling Update.
In a press release, CarbonLite attributed the bankruptcy to “pressures directly related to the coronavirus pandemic.”
“This included temporary production slowdowns caused by employee illness, the low price of virgin plastic compared to rPET and a nine-month delay in the official opening of the company’s new Pennsylvania plant caused by travel restrictions that delayed the entry into service of the equipment by the Europeans. manufacturers, ”the company said.
Last year, the company spoke about some of the pandemic pressures in an interview with Plastics Recycling Update, describing substantial cost increases.
The statement added that production at the CarbonLite facilities “will continue as usual without interruption, as will the payment of all employees.” The company does not plan to lay off workers and the statement guarantees that there will be “no supply disruption” for CarbonLite customers during the reorganization.
In the press release, CarbonLite indicated its intention to renegotiate contracts with its customers in connection with the bankruptcy.
“We have chosen to take this necessary step during a time of unprecedented challenge and we hope to emerge from the reorganization even more strongly positioned for the future,” said Leon Farahnik, CEO of CarbonLite, in the statement. “Our customers, who have steadily increased their commitments to the use of recycled plastic in their products, have expressed confidence in this process and in our thoughtful decision. “
In bankruptcy documents, CarbonLite Recycling estimated it had assets between $ 50 million and $ 100 million and liabilities between $ 50 million and $ 100 million. It has between 100 and 199 creditors.
The company expects sufficient funds will be available to pay its unsecured creditors after the reorganization, according to the bankruptcy petition. The list of creditors includes many companies involved in the plastics recycling industry.
The 10 unsecured creditors with the largest claims are bottlers Nestlé Waters North America of Stamford, Connecticut (owed $ 27.2 million) and Niagara Bottling of Ontario, California ($ 20.4 million); US equipment supplier Starlinger-Sahm of Fountain Inn, SC ($ 3.9 million); utility provider Riverside Public Utilities of Riverside, Calif. ($ 3.8 million); Allan Company recyclable collector of Baldwin Park, Calif. ($ 3.7 million); PolyQuest plastics processor of Wilmington, North Carolina ($ 3.2 million); sheet producer of RPET Everrank Investment Group of Victorville, Calif. ($ 2.5 million); Montreal-based ocean plastic sourcing company Bantam Materials International ($ 2.4 million); PQ Recycling (a PolyQuest company) of Wilmington, NC ($ 1.6 million); and energy consultancy firm Engie of Louisville, Ky. ($ 1.5 million).
30 other creditors have claims for smaller amounts of money.