PITTSBURGH A metal recycler operating in Ohio and Pennsylvania has filed for Chapter 11 bankruptcy protection, citing an issue with its lending institution as the main driver behind the move.
Medina, Ohio-based Ferromet Corp. and New Castle, Pa.-based subsidiaries Ferrotech Inc. and Ferrotech Realty LLC filed for bankruptcy late Tuesday in U.S. Bankruptcy Court for the Western District of Pennsylvania.
"The reason this has happened is we fell victim to what is happening to small businesses across America and is purely a banking issue," president Mark Heuschkel told AMM. "We had no other choice but to take this move."
The decision to file for bankruptcy protection was an emergency measure and the company intends to recover from the setback, Heuschkel said, noting that the companys operations are temporarily offline but are expected to be restarted soon. "We temporarily shut the yard down and we are working to get it reopened and resume operations as we work through this," he said, declining to provide a timeframe for the restart.
The companys New Castle processing facility, which has shredding capabilities, operates under the name Ferrotech, processing both ferrous and nonferrous metals.
Ferromet, the brokerage and corporate arm of the business as well as the parent company of Ferrotech and Ferrotech Realty, has estimated assets of less than $50,000 and estimated liabilities of between $1 million and $10 million, according to the bankruptcy filing.
Among Ferromets largest unsecured creditors are a number of steel and scrap companies, including Joe Krentzman & Sons Inc. and its related export company ($601,328), AMG Resources Corp. ($543,951), Protrade Steel Co. Ltd. ($480,897), SSAB Iowa ($104,117), Gallatin Steel Co. ($44,292) and Severstal North America Inc. ($39,962). NexTier Bank NA in Butler, Pa., reportedly holds the largest unsecured claims, totaling more than $4.9 million.
Subsidiary Ferrotech listed estimated liabilities of between $100,000 and $500,000, while Ferrotech Realtys liabilities were put at between $500,000 and $1 million.
Earlier this year, Hudson, Ohio-based scrap broker ProTrade filed a $480,000 lawsuit against Ferromet, alleging that the company was more than 90 days late in paying for scrap iron (AMM, Feb. 28). A settlement conference originally scheduled for May 14 has been cancelled as a result of Tuesdays bankruptcy filing, AMM understands.