American Fibers and Yarns Files Bankruptcy
American Fibers and Yarns filed for Chapter 11 bankruptcy protection Tuesday, blaming the strained economy.
The Chapel Hill company, which supplies dyed yarn for the automotive and household-furnishings industries, once had as many as 800 employees in the Southeast. But the soaring costs of raw materials, foreign competition and the overall weak economy hurt its business.
According to the filings, American Fibers owes $10 million to $50 million to dozens of suppliers and utility companies. Among them are Dow Chemical, Sonoco Products and Georgia Power.
The future of the company and its remaining 350 employees is uncertain, said Tim Boates, of RAS Management Advisers, a Rhode Island company that American Fibers hired to help supervise the bankruptcy.
Boates said the company would consider a number of options within the Chapter 11 rules, including selling off assets.
"That's certainly a possibility," Boates said. "The ultimate resolution is based on how well the Chapter 11 process goes."
The company was created in 1999 as a spinoff of Amoco Fabrics and Fibers Corp. and was purchased by a private equity firm, Monitor-Clipper Partners of Cambridge, Mass.
In 2002, the company moved its headquarters to Chapel Hill, hiring about 20 people to run its sales, marketing and administrative offices. In 2006, it expanded a plant in Bainbridge, Ga., because of demand from overseas customers. The company has a second manufacturing plant in Afton, Va.
Other textile companies, particularly those in the apparel industry, sent jobs offshore or closed because of foreign competition.
American Fibers avoided that fate by making fibers for theater seats and office furniture.
But over the past few years, high fuel costs significantly pushed up the costs of the company's raw materials, which are mostly petroleum-based, Boates said. That, along with the poor economy, crippled its business and made it hard to pay the bills.
There's a possibility that the company could be bought whole, Boates said. American Fibers "has had a lot of discussions over the last year looking for an opportunity like that," he said. "Clearly, that would be a good thing."
The News & Observer