SHERRILL — A little more than three years after filing for Chapter 11 bankruptcy protection, Sherrill Manufacturing’s reorganization plan received approval from the U.S. Bankruptcy Court for the Northern District of New York. On Nov. 6, Judge Diane Davis signed off on a plan that repays all Sherrill’s secured creditors and sets the company on […]
SHERRILL — A little more than three years after filing for Chapter 11 bankruptcy protection, Sherrill Manufacturing’s reorganization plan received approval from the U.S. Bankruptcy Court for the Northern District of New York.
On Nov. 6, Judge Diane Davis signed off on a plan that repays all Sherrill’s secured creditors and sets the company on the path to eventually repay its remaining unsecured creditors.
Sherrill Manufacturing filed for bankruptcy protection in October 2010, owing more than $2 million to its creditors. Gregory Owens and Matthew Roberts, both former Oneida Ltd. executives, founded the company in 2005, purchasing the former Oneida Ltd. plant in Sherrill.
At that time, Oneida Ltd. employed about 2,500 people and produced about 3.5 million pieces of flatware each week in Sherrill, Roberts, Sherrill’s president, says. The business partners knew Oneida Ltd. would miss having that production capacity locally, even as it continued to move more of its manufacturing offshore, so they built a business model around filling that void for Oneida Ltd.
The result was the formation of Sherrill Manufacturing and a multi-year supply agreement with Oneida Ltd. during which time Oneida continued to phase out domestic manufacturing and sent decreasing amounts of work Sherrill Manufacturing’s way.
By 2008, Sherrill Manufacturing began to shift gears and make plans for when it was free to develop and launch its own brand, says Owens, the firm’s CEO. The company brought in Cephas Capital Partners, LP and received loans from the state to revamp equipment and set up new tooling and patterns for its new Liberty Tabletop brand.
“That’s when the great recession hit,” Owens recalls. The flatware industry as a whole dropped about 50 percent, he says. Companies that Sherrill Manufacturing had sold its new Liberty brand to were now overstocked and slow to place new orders. By May 2010, Sherrill Manufacturing had laid off most of its staff and ceased regular production.
Limited production of the Liberty brand, contract production for companies such as Coffee Joulies, and leasing out some of the 1 million square feet of manufacturing and warehouse space at the plant helped the company a little bit, Owens says, but bankruptcy was inevitable.
While the business partners weren’t entirely sure what to expect from the bankruptcy process both were in agreement that it wasn’t going to mean the end of Sherrill Manufacturing.
“Our goal was always to begin manufacturing again,” Owens says. That’s why the company opted for Chapter 11 reorganization rather than Chapter 7 liquidation. Both Owens and Roberts believed it was very important to keep the company going as the only domestic manufacturer of flatware.
Under the reorganization plan, Sherrill Manufacturing will pay back all of the debt. According to court documents, the company will use $1.4 million it gained from the sale of its facility to ONX3, LLC to repay nearly $1 million to its secured creditors — Cephas Capital Partners, Mohawk Valley EDGE, and the Mohawk Valley Economic Development District. Sherrill Manufacturing will lease back 240,000 square feet of space from ONX3 to continue production of its Liberty brand.
Under the plan, Sherrill Manufacturing will make payments over the next five years to settle its debts with its unsecured creditors. The company will also share profits with creditors until they are paid in full, Owens says. Proceeds from a July 2012 equipment auction were used to offset some of the company’s debt.
Moving forward, Roberts says, the plan is to take Liberty Tabletop from online-only sales and bring it to a brick and mortar retail setting. The company is in talks with several large department stores and hopes to have its Liberty product on their shelves next year, he says.
The Liberty brand has already done well, building sales and brand loyalty with customers looking for quality products made in the United States, he says.
Rather than try to compete with foreign-made products, Owens says, Sherrill Manufacturing touts the quality of its Liberty brand. This has really helped the company stand out at a time when competitors who import are downgrading product quality, he notes. Anywhere from 5 to 10 percent of consumers in the $1 billion industry are looking for products made in the United States, he says.
“The Liberty side of the business is taking off in a way we never imagined,” Owens says. The company is heading into its busy season now as consumers are looking to purchase new flatware for their holiday celebrations or to give as gifts. Sales are typically three to four times higher in November and December than they are the rest of the year, he says. According to court documents, the company projects total revenue this year of $1.9 million.
To meet the production demand, Sherrill Manufacturing rehired five of its laid-off workers, bringing its full-time total to about 20 people. The firm also has about 10 part-time employees that help out, Roberts says. The company owners are being conservative and only hiring people when they are certain they can keep them employed, he notes. By this time next year, Roberts says he hopes to have another 10 employees as the company continues to grow.
The company’s bankruptcy attorney Neil Smith from Mackenzie Hughes LLP in Syracuse praised Owens and Roberts for their commitment not only to keeping their company going but also to repaying Sherrill’s debt.
“Certainly, it would’ve been easy … to turn it into a Chapter 7 or have an immediate auction with a Chapter 11,” he says. “What Matt and Greg did was a genuine accomplishment.”
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