Chapel Hill, N.C.-based American Fibers & Yarns Co. (AF&Y) has filed for Chapter 11
bankruptcy protection, with the intention of liquidating its assets. The company plans to
discontinue manufacturing operations and close its two plants in Bainbridge, Ga., and Afton, Va.,
on October 17 and auction off its assets. Including manufacturing and corporate employees,
approximately 330 people will lose their jobs.
According to documents filed with the US Bankruptcy Court, the company is the largest US
supplier of solution-dyed polypropylene filament yarns, and is a major supplier to the residential
and contract furnishings marketplaces as well as a supplier of product for industrial, automotive
and apparel applications. The yarns, marketed under the Marquesa® and Innova® brands, have been
touted for their earth-friendly, inherent performance attributes, and the company initiated a
program at its Bainbridge plant for recycling fabrics made with its yarns.
AF&Y cited a number of factors leading to the Chapter 11 filing, including increased
offshore sourcing for residential upholstery fabrics, a spike in the price of polypropylene resin ,
competition from polyester manufacturers, price pressure from lower-cost imported textiles and the
current economic decline. Coupled with those factors have been unsuccessful attempts over a period
of time to secure additional financing or to sell portions of the business.
The company’s outstanding debts include $7.7 million in revolving credit loans from General
Electric (GE) Capital Corp. and more than $6.8 million in accounts payable to its 20 largest
unsecured creditors. AF&Y has requested debtor in possession financing in the amount of $7.7
million from GE Capital to assist it in liquidating its assets in an orderly manner.
“The company has tried for many months to find either incremental investment or someone who
wanted to buy all or portions of the business, and all of those discussions came to naught,” said
Timothy Boates, president of Newport, R.I.-based RAS Management Advisors LLC, which has been
retained by AF&Y to assist it in its efforts to wind down the business and settle its affairs.
Remarking on the cost increases for polypropylene resin and competition from
now-lower-priced polyester-based products, Boates said: “For a long time, there was a real value
differential that AF&Y benefited from, where its products were cheaper than polyester-based
products, but the price of raw materials has gone up so sharply over the last couple of years that
that price advantage has turned the other way around. Right now, there’s a substantial negative
price variance between our product and polyester-based product.”
October 1, 2008