CANTON, Mass. (June 7)—Plymouth Rubber Co. has filed for Chapter 11 bankruptcy protection after its security lenders and the Pension Benefit Guaranty Corp. failed to reach agreement on the priorities of their respective liens.
Plymouth Rubber also said that it has arranged a cash collateral funding agreement with LaSalle Bank N.A., which will provide the company access to about $2 million to continue operating. The deal is subject to court approval.
The company opted to file for Chapter 11 "to ensure that it will continue to operate without interruption and maintain full service" to its customers worldwide, President Maurice Hamilburg said. "This action will protect and ensure fair treatment for the company and all interested parties while the dispute is resolved and a satisfactory plan negotiated."
Plymouth Rubber has been negotiating the refinancing of its secured debt, based upon the expected sale of its Canton, Mass., manufacturing facility. A contract has been signed for the sale and leaseback of the plant. The firm will discontinue manufacturing at the site within the next three years and transfer to a factory being built in China and to other plants.