Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
276-638-8801
Toll Free: 800-234-6575
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James "Jamie" A. Lester |
Wednesday, February 27, 2008
By GINNY WRAY - Bulletin Staff Writer
American Standard Building Systems likely will file for Chapter 11 bankruptcy liquidation this week, according to James A. “Jamie” Lester, president and CEO.
American Standard closed Jan. 25, citing the nation’s housing slowdown and the company’s inability to borrow additional money. It employed 57 full-time employees and 23 temporary workers at the time.
Some employees were not paid for work they did and some customers did not receive the products they purchased, Lester said in a letter to the editor on Page 4-A of the Martinsville Bulletin.
“The combination of the subprime mortgage crisis and the crash of the real estate market were too much for our company as well as for many others in our industry. When the bank would not lend us more money, we had no choice but to shut down the company. The company has no money and neither do I,” he wrote.
Lester said in an interview Tuesday that the original plan was to file for Chapter 7 bankruptcy liquidation, in which a trustee would have been appointed to handle the liquidation of assets. He described that as being like putting the company on an “auction block.”
However, it was decided to file for Chapter 11 bankruptcy, in which the company’s attorney will negotiate between secured lenders and prospective buyers to maximize the proceeds of the sale of assets, he said.
“The attorney and myself will be able to maintain more control of the liquidation of assets and the reason for that is to maximize what the assets are sold for, and the reason for that is to hopefully be able to take care of some of the customers and employees. It is an attempt on my part to take care of the people that got hurt,” he said.
Secured lenders are entities such as banks that loaned money to the company. The loans were secured by assets of the company, such as real estate, Lester explained.
However, Lester said he cannot assure former employees and customers that they will get any money. That, he said, will be determined in the bankruptcy process.
“No promises can be made but there is a chance customers and employees can get something,” he added.
After the company closed, about a half dozen prospective homeowners told the Bulletin that they were concerned that they might be out thousands of dollars they paid to American Standard for houses they did not receive before the company closed.
American Standard Building Systems, which was formed in 1968, also had filed for bankruptcy in 1996.
“I borrowed heavily to bring American Standard out of bankruptcy, convinced that the company could return to profitability. But American Standard was in worse financial condition than I realized. I put my entire personal assets into the company, reduced company expenses and changed the sales approach. Despite the heavy debt, American Standard operated for 11 years, providing jobs in Martinsville and supplying customers with quality products,” Lester wrote to the Bulletin.
Closing it was difficult, he wrote.
“It is a tragedy for all of us. As I lie awake at night agonizing over the situation, I ask myself if there was anything else we could have done. Obviously, economic conditions were beyond my control; so was the bank’s decision. Perhaps I should have closed the business earlier, but jobs were at stake in my hometown and some customers had made deposits. I hoped conditions would change; obviously, they have not. Sadly, the market continues to deteriorate,” he wrote. “I am truly sorry for the losses by employees and customers.”
Lester went to Florida after American Standard closed and said he did not speak to the press and customers on the advice of his attorney, who handled all calls.
He has no plans to return to Martinsville to live now.
“There’s nothing for me there,” he said. |
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