On April 2, 2015, Littleford Day, Inc., located in Florence, Kentucky, filed a chapter 11 bankruptcy petition in Delaware. “[A] recognized leader for the supply of Industrial Mixers, Dryers and Reactors”, according to its website, www.littleford.com, Littleford has been in business since 1882. The case is docketed as case no. 15-10722 and has been assigned to The Honorable Kevin Gross.
According to the Declaration of J. Garvin Warden, filed in support of the petition, Littleford has reduced its workforce over the past year from a high of 65 to 27 on the petition date. Mr. Warden notes significant operational costs and a dramatic reduction in orders since the end of 2014: “Despite good faith efforts to reduce costs and enhance revenue, the Company has simply been unable to maintain adequate cash flow to satisfy its mounting obligations.”
Mr. Warden’s Declaration explains that Littleford has explored various restructuring strategies, but has determined that a sale offers the best opportunity to get the best value for the company. After searching for a buyer, Littleford has determined to enter bankruptcy with Loedige Littleford Process Technology, LLC (“LLPT”) as a stalking horse. S-Two LLC owns 25% of LLPT. Two of the debtor’s 46 shareholders are members of S-Two. According to Mr. Warden, no other parties affiliated with the debtor are affiliated with LLPT.
Prior to the petition date, Littleford owed in excess of $1.9 million in secured debt to The Merchants Bank and Trust Company. In mid-March 2105, the debtor cashed out marketable securities and provided some additional cash, and paid off the secured debt. As of the petition date, the debtor has no available line of credit and is only able to operate with DIP financing. Unable, however, to find anyone else willing to offer DIP financing, LLPT has agreed to provide a $750,000 DIP facility in connection with its stalking horse bid.
According to Mr. Warden, the value of the LLPT bid is $1.75 million.