Photo Credit: Google Maps/Erin Industries
A Michigan company that supplies tube assemblies and transmission parts for the C8 Corvette has filed for Chapter 11 bankruptcy.
But hopefully Erin Industries – which counts Corvette as one of its best customers – believes the move will allow it to once again return to profitability.
In business since 1975, the family-owned company ran into financial problems after the pandemic left it unable to fulfill a deal struck in 2019 with Nova Steel USA Inc., a Canadian steel maker with a base near Grand Rapids, Steven Atwell, owner and president of Erin Industries, told Crain’s Detroit.
A petition filed this week in U.S. Bankruptcy Court of the Eastern District of Michigan in Detroit blames material cost increases and supply chain disruptions of the past two years for wreaking havoc with the company’s finances.
Erin hopes filing for the Subchapter V of Chapter 11 bankruptcy protection, an option aimed at helping smaller businesses beginning in 2020, will provide debt relief and leverage to restructure unfavorable contracts.
“We’re going to be able to work through this, and I think we’re going to survive. … I know we’re going to survive,” Atwell said. “Chapter 11 gives us some leverage to renew our contracts and try to get some of these (price) increases through.”
When the pandemic hit, Erin found itself unable to get parts needed to make equipment and lines for Nova. By the time Erin was finally able to fulfill the contract, Nova had already bought parts from another company and would not pay Erin.
“The Debtor’s financial condition rapidly went from stable to unstable, as a result of extra costs, losses and extraordinary items due to the Nova contract,” according to the bankruptcy petition.
Nova is the largest creditor in the case, with $869,865 owed by Erin Industries, according to court documents. Erin Industries said it has $4.8 million in assets and up to $10 million in estimated liabilities.
Atwell, whose father started the company in 1975, says he believes Erin can retain its customer base, including Corvette, and is hopeful he can eventually turn the company over to a third generation of his family one day.
“It means a lot to me that I have people working for me for over 25 years, so we’re a family business all the way down,” he said. “I will keep them a place to work. I owe them that.”
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