Promotion products company HALO Industries has filed for reorganization under Chapter 11 of the United States Bankruptcy Code.
The company cited a number of “non-operating” issues that contributed to the filing as well as the lease on its headquarters building and the acquisition of Starbelly.com.
The filing, made yesterday in the U.S. Bankruptcy Court in Wilmington, Delaware, includes the company’s Lee Wayne subsidiary. It excludes HALO’s Canadian and European operations, Premier Promotions, HALO Sports, and its marketing subsidiary, UPSHOT.
The filing will enable the company to continue to conduct its business operations and control its assets while restructuring its financial obligations, according to news reports.
In court papers the company reflected its commitment to pay all employee wages, commissions and benefits, to accelerate payments to vendors for shipments and to protect customer deposits and credits.
The company has secured $30 million in financing from its existing lenders, LaSalle Bank and Comerica to aid in the restructuring.
“After reviewing strategic options, our board of directors made the decision to relieve the business from past burdens,” CEO Marc Simon said in a statement. “As we implement our recovery plan, we are fully committed to maintaining and protecting our valued relationships with our sales force, employees, customers, vendors and shareholders. To demonstrate that commitment, the company is implementing an immediate vendor payment plan designed to ensure uninterrupted shipments to customers and protect the cash flow of our vendors.”
The bankruptcy filing follows a series of strategic initiatives taken by HALO under the direction of Simon, who was brought in five months ago to restore the company to financial health. In the second quarter, HALO sold two non-core business units, Lipson, Alport, Glass & Associates and Market USA, as well as its interest in iDentify, generating $80 million in cash. During this period, the company significantly reduced overhead.
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