NILES — A Southwest Michigan retailer and machine shop specializing in refurbished diesel engines has submitted for Chapter 11 bankruptcy significantly less than two several years just after incorporating, citing mounting guarantee claims and broader provide chain disruptions.
Atlas Significant Motor Co., a Niles-based mostly company performing organization as Globally Diesel, on March 14 submitted for Chapter 11 safety in the U.S. Bankruptcy Courtroom for the Western District of Michigan less than Subchapter V of the U.S. Bankruptcy Code.
Owned by Richard Campbell, Atlas operates from a 45,000-square-foot warehouse at 1515 N. Outdated U.S. Highway 31 in Niles. The corporation has nine whole-time workers, which includes Campbell and his spouse, in accordance to an affidavit Campbell submitted.
In court filings, Atlas documented $1.1 million in property and far more than $4.2 million in whole liabilities, like much more than $4.1 million in secured promises.
According to an affidavit, Campbell bought the belongings of Top quality Truck Pieces Inc. (QTP), formerly accomplishing company as Worldwide Diesel, for $3.8 million in October 2021. Atlas Heavy Motor Co. was integrated only for the objective of getting QTP’s property.
The order cost, closing fees and startup capital for Atlas were being financed by a bank loan from Huntington Bank, as nicely as vendor funding from Excellent Truck Elements and a funds infusion of $210,000 from the Campbells.
The company’s economical hardships started six months just after closing the offer, when Atlas commenced receiving numerous warranty claims that totaled around $95,000, in accordance to Campbell’s affidavit. Fulfilling these statements sapped Atlas’ operating money, according to the affidavit.
At the same time, market-huge provide chain shortages led to the company’s incapacity to replenish stock at the charges and margins that aligned with the value of QTP’s belongings, court docket filings assert.
To combat these challenges, Campbell mentioned he laid off somewhere around 25 per cent of staff members, enhanced solutions and acquired Missouri-centered 2nd Prospect Diesel in an effort and hard work to vertically combine stock manufacturing. Campbell and his wife also waived their salaries from July 8, 2022, to Feb. 21, 2023, according to court docket filings.
Nonetheless, these decisions were “insufficient remedies,” as Atlas did not create adequate profits and defaulted on its mortgage payments to Huntington, in accordance to the affidavit.
Meanwhile, Huntington also submitted a civil go well with in opposition to Atlas Major Engine Co. in Berrien County Circuit Courtroom. The chapter 11 filings exhibit that situation is continue to pending.
The court filings clearly show Atlas’ gross income reduced from approximately $2.3 million involving July 1, 2021, and June 30, 2022, to less than $1.4 million from July 1, 2022, to the March 14, 2023 filing day.
The unsecured lenders incorporate Huntington Lender Industrial Loan Servicing ($3.39 million complete), Top quality Truck Sections ($422,572), American Express ($462,084), Henry & Sons Products Restore in Indiana ($14,369) and Brunetti Specific in Florida ($10,033).
Campbell reported in the affidavit that Atlas will restructure its liabilities by means of its Chapter 11 approach, allowing for the organization to operate at margins ample to replenish its money collateral.
Steven Bylenga, spouse and co-founder of Grand Rapids-dependent CBH Lawyers & Counselors PLLC, is representing Atlas in the Subchapter V approach, which was developed to assist smaller corporations preserve time and charges as opposed to a usual Chapter 11 submitting.
Campbell could not be achieved for comment.