Information for Creditors of Little Washington Fabricators, Inc.
Case Number 22-10695 in the United States Bankruptcy Court for the Eastern District of Pennsylvania
LITTLE WASHINGTON FABRICATORS’ BUSINESS
Little Washington Fabricators, Inc. first opened in 2012 in Gordonville, PA. According to papers filed by the company in its bankruptcy case, when it opened, Little Washington Fabricators was just a small shop with four employees and a single truck. In contrast, the company operates today out of a 32,000 square foot shop in Christiana, PA with nearly 30 employees and 8 trucks. Little Washington is a large metal fabricator which provides miscellaneous and structural steel for construction projects.
Prior to the COVID-19 pandemic’s spread across the United States, Little Washington was realizing over $25 million per year in sales. However, the pandemic has had a drastic effect on the company’s business. Beginning in April 2020, the pandemic dragged the Debtor’s business down by increasing supply pricing, increasing safety and sanitation costs, and slowing delivery of necessary materials.
Under its pre-pandemic contracts, Little Washington was obligated to overpay for materials and unable to pass on those costs. While the company was able to weather the coronavirus pandemic for some time, ultimately its contracts and rising prices drove Little Washington to bankruptcy.
THE COMPANY INTENDS TO RESTRUCTURE
Since its founding in 2012, Little Washington Fabricators has grown and evolved into a company boasting over $25 million in annual sales. The COVID-19 pandemic presented new and challenging obstacles for the company, but it is confident that it will be able to return to profitable operations once it has restructured its debts and obligations.
The main impediment to Little Washington’s profitability, and the primary drain on its resources, are the pre-pandemic contracts that the company entered into. These contracts set out pricing for materials that are far below current market prices because the contracts were negotiated before the coronavirus pandemic wreaked havoc on steel pricing and the supply chain. Through the bankruptcy, the company can finish servicing, renegotiate, or cancel these contracts. Indeed, it has already begun the process of shedding unprofitable contracts.
Little Washington has filed documents indicating that it has somewhere between 60 and 70 creditors. Those creditors have a deadline of June 13th to file documents proving their entitlement to payment. This deadline is an important milestone in the case because it allows all parties to get an idea of exactly how much money Little Washington owes.
WILL CREDITORS BE PAID WHAT THEY ARE OWED?
At this time, it is impossible to say how creditors will fare in the Little Washington Fabricators bankruptcy case. The Debtor has not yet filed any details about how it plans to get through bankruptcy. However, Little Washington’s commitment to reorganizing is a positive sign for its vendors. If creditors act now, they can have a voice in helping to shape the Debtor’s bankruptcy plan of reorganization.
Frequently, unsecured creditors of Chapter 11 debtors are small companies who can’t afford to hire attorneys to fight for what they are owed. The bankruptcy laws take that into account by allowing for unsecured creditors to work together on committees. An official committee of unsecured creditors in a Chapter 11 case is a group of unsecured creditors who are permitted to speak on behalf of all of the similar unsecured creditors. A committee does this by hiring lawyers, but those lawyers are not paid by the creditors. Instead, the lawyers for the committee apply for payment to the Court and, if their fees are approved, are paid by the Debtor. This is typically the fastest and easiest way for creditors to protect their rights in Chapter 11 bankruptcy cases.
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