Sale would reopen 2 former foam production plants that were closed Aug. 7 when Klaussner also ceased operations
ASHEBORO, N.C. — VPC Group USA, a producer of foam and fiber material, is planning to purchase Klaussner subsidiary Prestige Fabricators for about $7 million as part of a sale of the company’s assets.
The company has sought court approval to buy the assets of Prestige, which also produces foam materials for upholstery. As part of the purchase, it plans to continue the operations, which employed about 27 at its foam plant and 30 at its fabrication plant prior to their closing on Aug. 7. VPC plans to extend offers of employment to some of these workers.
When it closed on Aug. 7, Prestige effectively ceased operations at two foam manufacturing facilities, including a foam plant and a fabrication plant in Randolph County, North Carolina, where Klaussner was based. Klaussner also ceased operations Aug. 7, putting 884 people out of work, including those employed by Prestige. The defunct company went into receivership soon after.
Legal sources describe a receivership as a court-appointed tool that helps creditors recover funds that are owed to them while also helping companies avoid a bankruptcy. This process also is said to help make it easier for a lender to collect funds owed to them in the event a borrow defaults on a loan.
“Based on VPC’s reputation as an industry leading foam manufacturer, the receiver believes that VPC has made a good faith offer and has the ability to consummate the transaction,” Focus Management Group, the general receiver for Klaussner, and Focus agent Michael Grau said in a court filing earlier this month. The deadline for objections to the purchase is 5 p.m. Sept. 28 and the closing date has been scheduled for Oct. 6.
The court filing obtained by Home News Now said that about seven parties expressed interest in Prestige and six executed nondisclosure agreements. Two of those submitted purchase offers.
VPC’s offer was accepted as part of the negotiations and it included a deposit of 10% of the proposed purchase price, with $50,000 as a nonrefundable portion. VPC proposes a cash closing with the intent to acquire substantially all of Prestige’s assets. This includes machinery and equipment, accounts receivable, assignable contracts, personal property leases identified by the purchaser, technology and intellectual property and all proprietary rights to the sellers’ ERP system, to name several key fixed assets.
The filing by the receiver states that “the court should approve the sale to VPC and authorize the parties to enter into the asset purchase agreement because the sale is in the best interest of the receivership estate, its creditors and other interested parties. … VPC’s purchase of the Prestige assets would yield $7 million to the receivership estate, which in the receiver’s business judgment is substantially more than a liquidation process, including more value than prior appraisals have indicated on a liquidation basis accounting for costs of sale.”
It added that VPC’s experience as a foam manufacturer “will aid VPC in the rehiring of former employees that were terminated when Prestige ceased operations in August. Such employment opportunities would likely be unavailable in a liquidation process or if the Prestige assets were otherwise sold to a buyer who did not plan to operate the Prestige business as a going concern. If VPC is able to take over the business operations pursuant to the proposed sale, the impact on the individuals previously employed by Prestige will be mitigated.”