WALKER — Krieger Craftsmen Inc., a manufacturer of plastic injection molds for the automotive, medical, appliance and consumer products industries, has filed for Chapter 11 bankruptcy.
Owned outright by Timothy Krieger, the business is headquartered at 2758 3 Mile Road NW in Walker and employs approximately 16.
Krieger filed under Subchapter V of the Bankruptcy Code, which was created under the Small Business Reorganization Act of 2019. This law — which is emerging as a lifeline for many insolvent small businesses with debts under $7.5 million — went into effect on Feb. 19 and expedites the Chapter 11 process while cutting down on expenses associated with bankruptcy proceedings. Additionally, the small business debtor can maintain a stake in the company throughout the process instead of having to buy back in.
“There are a lot of small businesses like Krieger — where there is a solid operator, he’s got a good relationship with customers and a good relationship with vendors — and this Small Business Reorganization Act allows him to hit pause and get back on track,” Todd Almassian, partner at Keller & Almassian PLC who is representing Krieger in the bankruptcy, told MiBiz. “It’s good for our economy and I think we’ll see a lot of them.”
In the filing with the U.S. Bankruptcy Court for the Western District of Michigan, Krieger said business decisions led the company to overextend itself, which was then compounded by the economic fallout from the COVID-19 pandemic, leading to financial insolvency.
The company reported $1.6 million in assets and $6.3 million in liabilities, according to the filings.
In an affidavit, Krieger said the company invested $1.3 million in 2016 to launch a second business called J-Flex, which specialized in creating molds for automotive lighting products. J-Flex underperformed because of changes in technology that led to a reduction in the number of reflex designs required for automobiles. Krieger said in the filing that the company also found difficulty breaking into the market as a new supplier.
At the same time it established J-Flex, Krieger Craftsmen also expanded into offshore mold building, which increased staffing to 34 employees in 2017 to keep up with the workload. The company also invested $1.2 million in a new 5-axis CNC machine.
The company’s financial woes were exacerbated by the COVID-19 pandemic, per the bankruptcy filing, which noted a $382,000 Paycheck Protection Program loan was insufficient in helping the business dig out.
According to the filings, Krieger Craftsmen’s revenues have fallen every year since 2017, when it generated $6.9 million in sales. Gross revenues dipped to $4.1 million in 2018 and $3.9 million in 2019. Year to date in 2020, the company generated $1.7 million in gross revenues.
Estimating that the business has roughly 50 to 99 creditors, many local businesses are listed as top unsecured creditors for Krieger. They include Model Die & Mold Inc. in Grand Rapids ($149,225), Michael Haws of Sparta ($105,000), Grand Rapids-based law firm Koernke & Crampton PC ($100,000), Pioneer Construction ($49,682.17), Grand Rapids mechanical contractor Andy J. Egan Co. Inc. ($36,157.87), Grandville-based Extreme Wire EDM ($15,675.00), Comstock Park-based Commercial Tool & Die Inc. ($14,100) and Positive Designs LLC in Middleville ($13,755).
Krieger Craftsman also took out three loans from Chemical Bank, now TCF National Bank, in 2018 for $1.2 million, $1.2 million and $1.72 million. The company owes $838,966.24, $1.1 million and $1.3 million on those loans, respectively. The company also owes roughly $500,000 on a $1 million loan it took out in 2015.
Krieger, who started the operation in his garage in 1993, formally incorporated Krieger Craftsman Inc. in 1995 and began manufacturing plastic injection molds for the automotive, medical and appliance industries.