ALBION — Against the backdrop of the COVID-19 pandemic that has ravaged some segments of the manufacturing industry, Velocity Manufacturing LLC has filed for Chapter 7 bankruptcy.
The company, which features four different divisions, filed its petition with the U.S. Bankruptcy Court for the Western District of Michigan on Oct. 23. The filing shows plummeting revenue paired with mounting debt.
Velocity — located at 921 Elliot St. in Albion — specializes in four different areas: maintenance, repair and operations for parts and assemblies; custom food and beverage processing and packaging machines; tube and small parts production; and manufacturing services and supply chain management.
Per the filing, the certified minority-owned company claimed just less than $100,000 in assets, with $8,363 in cash, $30,219.79 in accounts receivables and $61,249.99 in inventory.
In 2018 gross revenues for the company sat at $978,889 before dipping to $844,668.21 in 2019. Since Jan. 1, Velocity had only generated $150,805.54 in revenue.
The company listed Homestead Savings Bank as its only secured creditor for a $34,589.15 loan it provided in October 2018. That loan came with an equipment lien.
Among the unsecured creditors is Albion Machine and Tool LLC for $53,776.96 and $3,250 in parts and rent, respectively.
Chicago-based professional business services and facility management firm Vargas Group Inc. is also an unsecured creditor with a $55,000 promissory note dated Dec. 17, 2004. Interest was not included in the claim as Jamie Cruz is an owner of both Vargas Group and Velocity Manufacturing, where he has a 66.7 percent ownership stake, according to the filing. The estate of former vice president William Stoffer, which the filing states passed away in December 2019, retains 33.3 percent ownership in the company.
Velocity Manufacturing is working with Sugar Felsenthal Grais & Helsinger LLP in Chicago on the bankruptcy case. A message left with the law firm was not immediately returned. Calls to Velocity Manufacturing also went unanswered.
As the COVID-19 pandemic wears on, manufacturers are left to contend with the economic fallout. Experts have said PPP loans and other relief have deferred financial distress for some manufacturers. However, those financial struggles could become more pronounced as that money runs out.
Earlier this month, Krieger Craftsmen Inc., a Grand Rapids-based manufacturer of plastic injection molds for the automotive, medical, appliance and consumer products industries, filed for Chapter 11 bankruptcy under Subchapter V of the bankruptcy code — an expedited, cost-efficient proceeding that is available to insolvent small businesses with debts under $7.5 million.