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The company is seeking a "going concern liquidation" after closing 10 days ago, putting most of its employees out of work.
Friday, March 22, 2013
Timber Truss Housing Systems, which closed its Salem plant and laid off 50 workers 10 days ago, filed for Chapter 11 bankruptcy Friday.
The 52-year-old business is nearly $5.5 million in debt and is hoping to achieve what attorney Andy Goldstein called a “going concern liquidation.”
The ideal situation would be a similar business to Timber Truss, which manufactured prefabricated building components and packaged homes, buying the Salem plant.
“Our goal will be to be able to sell this facility for something near what it’s worth,” Goldstein said, “which will hopefully let us have a good business user in the city of Salem, which will obviously replace the employment in the city of Salem.”
They have a couple of “possible interested parties,” he said.
The Salem real estate has an appraised value of $3.5 million, not including the equipment inside it, according to Goldstein.
Built in 1974, the 162,000-square-foot building sits on 59 acres on McLelland Street, online real estate records show, and includes a landing strip for small planes and a hangar.
It’s hard to value the equipment inside the building, Goldstein said, because it’s worth more if it’s bought with the building. But an offer of $3.5 million for all of it “would get you a call back,” Goldstein added.
The company also owns a similar facility in Orange that opened in 2006, but which has been closed since 2008. That real estate is appraised at about $3.2 million, Goldstein said. In addition, Timber Truss still has accounts receivable valued at up to $500,000.
The company, founded by Al James of Roanoke, at one point operated both plants and had offices in Lynchburg, Christiansburg, Harrisonburg and at Smith Mountain Lake.
But the recession and corresponding hit to the housing and building markets hit Timber Truss hard.
When the company decided to close earlier this month, only the Salem plant and a sales and engineering office in Lynchburg were still open.
The company’s last, best hope was an agreement to build a large order of homes in an area of Chile devastated by a 2010 earthquake, but eight weeks later, the down payment had not come through.
The company’s chief creditor is Valley Bank, which is owed $3 million from financing the Orange facility. The bank has a lien on that facility, the accounts receivable and the equipment in Salem. The Bank of Floyd is owed $1.9 million, Goldstein said, and remaining creditors are owed about $500,000.
A skeleton crew remains at work with the company, mainly cleaning up the Salem plant and equipment to prepare them for sale, along with remaining inventory, Goldstein said.
ValleyBank, which has a claim to any money still coming in to Timber Truss, has been very cooperative in agreeing to allow the company to continue paying remaining employees and make 401(k) contributions, Goldstein said.
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