NEW YORK — After almost two years in bankruptcy, fleece mill Malden Mills Industries Inc. returned to solvency Friday.
But Aaron Feuerstein, the grandson of the company’s founder who gained prominence on the national stage in 1995 after a massive fire destroyed the company’s mill, has lost control of the 97-year-old firm after three decades in the top job.
On Friday afternoon, the Lawrence, Mass.-based company said its Chapter 11 reorganization plan had been approved and that it emerged from court protection owned by its creditors and under the leadership of acting chief operating officer and chief financial officer David Orlofsky, a turnaround expert who has been working with Malden since August 2001.
Orlofsky is a member of the turnaround firm Kroll Zolfo Cooper. He will report to an executive committee of three members of the board, though the company did not disclose which directors sat on that committee.
Feuerstein, 78, who had struggled in recent months to assemble a financing package that would have allowed him to retain ownership of the firm, has stepped down as its chief executive officer, a role he had filled since the early Seventies. He retains a seat on the seven-member board and keeps the titles of chairman and president, though the company said that would now be a nonexecutive role.
Malden said it plans to name a new ceo by the end of the year.
“The company has reduced its debt load from more than $170 million prior to Chapter 11 to less than $80 million,” Orlofsky said in the statement. “This puts Malden Mills in a much more financially secure position.”
The debt load was the legacy of the December 1995 fire, which destroyed three of the company’s 10 Massachusetts factory buildings. Feuerstein vowed to rebuild the mill in New England, rather than relocate it to a place where costs were lower. He also continued to pay the displaced employees for most of the period of construction.
At the time of the fire, Malden had about $400 million in revenues and 2,400 employees. Today it has about 1,200 workers — roughly the same number it had at the time of the filing. Revenues are about $174 million, according to business manager David Costello.Two of the company’s new directors are affiliated with London Fog. They are Kevin Collins, the coat maker’s vice chairman, and Richard K.M. McCaffery, who heads sales and marketing at the firm.
The other new directors are Deborah G. Ellinger, who works in the private equity investment field; Alan M. Jacobs of AMJ Advisors Inc., a consulting firm; William E. Redmond Jr., former ceo of Garden Way Inc., a maker of powered gardening tools, and Gregory L. Segall, chairman and managing director of Chrysalis Management Group LLC, a turnaround firm.
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