Aerospace-Parts Manufacturer Fansteel Files Chapter 11 Bankruptcy

by San Antonio Attorney

The supplier of aerospace-parts attributed its financial hardships on U.S.  military decline of presence in Afghanistan and decrease of oil prices.

Fansteel Inc., a maker of aerospace-parts in the United States, filed for Chapter 11 bankruptcy on Sept.  13, blaming its money problems on the decline of presence of United States armed forces in Afghanistan and the plunge in oil pricing.

Fansteel, employing 600 workers, sought for bankruptcy protection to lighten its debt burden, which is as high as $40 million.

The manufacturer of metal components serves clients in the defense and aerospace sectors, and its products are utilized in the aircraft carriers and helicopters of the U.S.  armed forces, based on court documents filed.

The fall of oil prices and the armed forces drawdown caused a drastic decrease in demand for aircraft parts, reducing the company’s profitability, the court papers show.

Due to the changes in oil prices, the company made efforts to refinance its debts with many banks.

Last May, the company’s board of directors appointed new top executives and a group of professionals that created a turnaround strategy, which was submitted to its bank lender.  The debt was acquired by TerraMar, a credit fund firm.

Court papers reveal that Fansteel had a conflict with TerraMar, which tried to get more hold on Fansteel.  Moreover, TerraMar tried to put the steel company in bankruptcy would erase other creditors, according to court papers filed by Fansteel Chief Executive James Mahoney.

Officials of Fansteel said seeking bankruptcy protection is going to provide them time to plan for a debt repayment scheme.  That plan, according to them, is going to pay a 100% of their debt to its unsecured creditors and offer shareholders an opportunity to retain their ownership stakes in Fansteel.

Also, Wellman Dynamics Corp. has filed for bankruptcy.  The business generates around 67% of Fansteel’s income and has 365 employees.

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