(WBNG Binghamton) Without the ability to use immediate cash collateral, Endicott Interconnect owners say the embattled company will not be able to pay for insurance, employee wages or other "critical operating expenses," according to a court filing in the U.S. Bankruptcy Court, Northern District of New York.
The company filed for Chapter 11 protection Wednesday in U.S. Bankruptcy Court.
Its estimated liabilities are between $50 million and $100 million divided among 200 to 999 creditors, according to court documents.
The largest unsecured claim is with IBM for nearly $5.5 million, according to documents.
However, a letter sent to employees dated Wednesday states the company lost nearly $100 million between 2009 and 2012. The letter states EIT cannot meet $70 million of that debt, "making Chapter 11 the only viable solution."
"Chapter 11 is a legal process that will allow EIT the opportunity to continue to conduct business while the company restructures its financial affairs, thereby ensuring the company’s long term viability and attractiveness to a qualified buyer who is willing to continue the investment into the facility and its workforce," according to the letter by Chief Restructuring Officer David Van Rossum, dated July 10.
The letter assures employees "EIT will remain open and plans to meet its commitments to all customers."
Van Rossum also writes "(e)mployee wages and health benefits are not expected to change as a result of the Chapter 11 filing," adding that pay cycles will continue on the traditional schedule.
"Workforce levels will continually be evaluated, as always, based on customer demands," the letter states.
The letter says EIT minority owners the Matthews family took full control of the company in 2013. Van Rossum says the family will make a bid to buy the company and "retain jobs in a restructured environment."
As a result, the company's interim CEO, Jim Matthews, Jr., -- who took over this spring after former CEO Jay McNamara resigned -- will step down to focus on the restructuring plan.
It's the latest in a series of blows for what was once one of Broome County's largest employers.
In a court filing in April, McNamara told a federal judge if the company's private jet were taken away, and it lost a subsequent lawsuit, the result would likely be bankruptcy.
One of two occurred the following month, when U.S. District Court Southern New York Division Judge Jed S. Rakoff ordered U.S. Marshalls to seize the Hawker 800 corporate jet, which was at the time parked at Binghamton Regional Airport.
Canal Air LLC -- a subsidiary of General Electric -- is suing Endicott Interconnect because the Broome County employer missed a nearly $77,000 rent payment on the private jet Canal owns.
In a separate lawsuit, Canal is asking for $11.5 million because EI missed the payment. McNamara told the court a ruling for removal of the corporate jet would add prejudice to the subsequent $11.5 million lawsuit. The judge disagreed.
McNamara said in an April letter to the court that losing both lawsuits would cost the future of EI, and the company's now 605 jobs.
In his decision, Rakoff said the facts speak for themselves.
"The undisputed facts demonstrated beyond any doubt that Canal Air is entitled to the immediate return of its aircraft under the terms of the lease," he wrote in April.
The number of employees at EI -- and the company's financial health -- have been difficult to determine, despite repeated reports from current and former employees who have expressed concern over its shrinking workforce.
McNamara retired April 12, but among his final acts was penning a letter to defend his company's actions in its dealings with Canal Air.
"EIT has been involved, for months, in efforts to restructure its financing so as to produce a positive cash flow and to allow it to remain in business and to continue to employ its employees, currently numbering approximately 605," McNamara wrote in the letter dated April 8.
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