On November 26th, 2017, a manufacturer and fabricator of self-sealing and crash resistant aviation fuel cells based in Wichita Falls, Texas, filed for Chapter 11 bankruptcy with the U.S. bankruptcy Court in the Northern District of Texas. The privately-held company, called Amfuel, also has a production facility in Magnolia, Texas and employs around 200 people. Amfuel has been doing business with government and private sector companies for over 70 years.
Chapter 11 Reorganization
Chapter 11 bankruptcy is reserved for companies that are saddled with debt and want to restructure that debt in order to become more competitive and improve their balance sheet. Amfuel hopes that the move to file Chapter 11 bankruptcy in Texas will streamline their operations, as well as, increase overall profitability. In bankruptcy court documents, Amfuel indicated that they owe $1 to $10 million and have a similar range of assets. The Chapter 11 bankruptcy filling in Texas also included an emergency motion to pay wages, payroll taxes, and other employee benefit claims. The bankruptcy court will now allow Amfuel to submit a reorganization plan within the next 4 months. If it is approved by the bankruptcy judge, the company will be cleared to proceed with its new repayment plan.
Amfuel Still Open for Business
Amfuel is one only a handful of businesses that supply fuel cells for the U.S. Department of Defense (DOD) and was recently awarded a $10 million contract with the US Air Force for fuel cell bladders for the Lockheed C-130 aircraft. Needless to stay, Amfuel is still open for business and using the Bankruptcy Code to propose a plan of reorganization to the courts in order to stay alive and pay back its creditors over time.
Amfuel’s move will hopefully be enough to keep the doors open and its workers and independent contractors employed. Their story shows that even with multi-million dollar government contracts coming in, companies can sometimes need to restructure their debt in order to remain solvent.