MALDEN MILLS INDUSTRIES HALTS LAYOFFS AMID CH. 11
Byline: Vicki M. Young / Joshua Greene
NEW YORK — Malden Mills Industries’ $20 million debtor-in-possession financing facility will help it to fund day-to-day operations and keep it from laying off any of its employees.
The mill last week filed for Chapter 11 bankruptcy court protection in Worcester, Mass.
Malden’s president and chief executive officer, Aaron M. Feuerstein, made national headlines on Dec. 11, 1995, when he announced that he would keep Malden employees on the payroll while rebuilding the Lawrence, Mass., plant that was nearly destroyed by a catastrophic fire. The debts associated with rebuilding the plant led to the filing, according to court papers.
Though Malden cut down the number of its employees over the past few months while restructuring, Cesar Aguilar, senior vice president of sales and marketing worldwide, said further layoffs would not occur as a result of the Chapter 11 filing. Court documents peg the total head count at 1,250.
“Chapter 11 was the best way to restructure and come out strong. We’re lean and mean now and we’ve got a lot of opportunities in the market. We are fully operational in all of our manufacturing facilities. It’s business as usual and we are delivering products as I speak,” he said.
In addition, Malden’s contract with UNITE expired Friday, but sources at the company said the two are renegotiating and an agreement is expected to be reached in the near future.
The mill is seeking bankruptcy court permission to end employment contracts with four members of its staff: Howard Ackerman, former vice chairman of new business development who retired in January 1999, annual salary of $500,000; William Demmons, engineer adviser to the president, $80,000; Gabay Amnon, screen-print finishing department manager, $149,350, and Ernst Weglein, general counsel, $142,500. Ackerman is credited with the development of Polarfleece and Polartec.
Also filing Chapter 11 were three subsidiaries, AES Properties Corp., ADS Properties Corp. and Malden Mills Distributors Corp. Four subsidiaries not involved in the bankruptcy are Independent Furniture Supply Co. Inc., Malden Mills of Canada Ltd., Malden Mills FSC Corp. and Malden Mills GmbH.
Top unsecured financial creditors are GE Capital Corp., Special Value Investment Management and First Essex Bank. The value of their claims was not specified in the filing. Top unsecured trade creditors include: Costco Wholesale, Issaquah, Wash., $3.1 million; Unifi Inc., Greensboro, N.C., $1.8 million; Hewlett Packard, Roseville, Calif., $1.2 million; E.I. du Pont De Nemours, Wilmington, Del., $420,460; Caroline Mills, Maiden N.C., $371,263; The North Face, San Leandro, Calif., $286,667; Eddie Bauer Inc., Redmond, Wash., $265,809; Patagonia, Ventura, Calif., $229,140, and Lands’ End, Dodgeville, Wis., $167,832.