In court, Klausner Lumber One falls into the category “assets: $ 100 to 500 million; debt: $ 100 to 500 million”.
According to court documents, Klausner Holding USA sees itself as being affected by restrictions imposed due to Covid-19. On 16 March, Klausner Lumber One LLC had to be closed suddenly and without notifying employees. Executive staff were “evacuated” to Europe. According to the website Law360.com, the move reflected concern that European professionals and managers would otherwise strand in America due to the pandemic travel restrictions.
In a court document, Michael Freeman, Klausner's chief restructuring officer and managing director of Asgaard Capital LLC, said that remaining managers sought “Chapter 11” in order to “protect the new, state-of-the-art plant and […] professionals capable of selling its assets”. According to Freeman, the company hopes to prevent “a very large investment from completely going to waste or being dismembered by individual creditors”.
A twin plant in Enfield, North Carolina/US, was shut down weeks earlier, Freeman said. Both plants have a production capacity of 825,000 m³ of southern yellow pine a year (nominally on the basis 2-by-4; 350 million bft/year). According to Law360.com, both plants are owned by the Austrian KNB GmbH, which is 100% owned by the non-debtor foundation Alpha Privatstiftung. In April, insolvency proceedings have been opened over two of Klausner’s Austrian companies: Klausner Nordamerika Beteiligungs GmbH and Klausner Trading International GmbH.
As of yet, it is not clear whether the Enfield plant is part of the Delaware case. Freeman said details would be filed with the court next week.
According to a declaration in a Worker Adjustment and Retraining Notification Act complaint filed on 21 March in the U.S. District Court for the Middle District of Florida, default judgments were entered against both sawmills on 23 April for no-notice worker pay violations. Holzkurier.com reported on it.
“Prior to 16 March, Klausner evacuated its foreign management team to Austria, with knowledge that the facilities would be closed,” the WARN Act complaint said. According to he document, workers were told they would be paid through the full closing week. However, they were instead laid off without receiving pay due for the prior two weeks.
Workers “were laid off by Klausner without cause as part or as the reasonably foreseeable result of plant shutdowns or mass layoffs,” as Law360.com cites the complaint.
According to Freeman, problems arose soon after the Austrian management team’s departure. “Having no ability to operate, no financing, and no liquidity, KL1’s operations were shuttered immediately, and there was no controlled liquidation, bankruptcy filing, or the like,” Freeman said.
* Chapter 11 is part of the United States Bankruptcy Code which permits reorganization of business finances by the court (https://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Code).
