NEW HAVEN, Conn. — Lavatec Inc., a manufacturer of industrial laundry equipment with installations across the country, has filed for Chapter 11 bankruptcy protection.
In its voluntary petition filed July 24 with the U.S. Bankruptcy Court, Naugatuck, Conn.-based Lavatec listed assets totaling $3.5 million and debts totaling approximately $5.5 million.
American Laundry News has contacted Lavatec President Samir Tadros requesting comment and is awaiting a reply.
On Thursday, the court approved Lavatec’s request to borrow up to $1 million from Tadros “for working capital and for specified operating costs,” according to U.S. Bankruptcy Court, District of Connecticut (New Haven) records.
“Without the proposed financing, the Debtor ... will not have the funds necessary to ... fund any shortfalls in its operating budget and purchase additional inventory and parts” previously supplied by now-defunct equity owner Lavatec GmbH, the motion read in part.
The purpose of Chapter 11 bankruptcy is to rehabilitate a business as a going concern, according to the Associated Press. This action frees the company from the threat of creditors’ lawsuits while it reorganizes its finances. The debtor’s reorganization plan must be accepted by a majority of its creditors.
Unless the court rules otherwise, the debtor remains in control of the business and its assets, according to the AP.
Lavatec estimated the number of creditors to be between 100 and 199. Court records list Cintas Corp., Florida Laundry Systems, Hawaiian Alliance Equipment Co. and K-Bro Linen Systems among them. (Crain Communications, parent company of American Laundry News, is also a creditor.)
At the Clean Show in June, about a month before the bankruptcy filing, Tadros told American Laundry News that Lavatec had reorganized its operations after an insolvency proceeding in Germany.
He said then that his company remains committed to serving U.S. customers through its Connecticut plant and through the plant of Washex, another laundry equipment manufacturer owned by Lavatec GmbH, in Wichita Falls, Texas. More than 50% of the equipment manufactured by the two companies is installed in the United States, according to Tadros.
Washex laid off 27 employees in January, citing the economy and slumping orders, according to a report published in the Times Record News, the Wichita Falls newspaper.