Goldens’ Foundry & Machine Company (“Goldens’ Foundry” or the “Debtor”) filed a petition on October 2, 3009 in the Bankruptcy Court for the Bankruptcy Court for the Middle District of Georgia (case number 09-41222) for relief under Chapter 11 of Title 11 of the United States Code.    Goldens’ Foundry’s primary business is the manufacture of gray and ductile iron castings for the transportation, construction, agriculture and energy markets. This post discusses the information provided in the initial filings, gives a preliminary assessment of the direction of the case from a supplier standpoint and provides the list of the top unsecured creditors.

Background; Debt Picture

The case has been assigned to Judge John T. Laney III.  The bankruptcy petition was signed by George Boyd, Sr. as President of the Debtor.  The Debtor’s bankruptcy counsel is Fife M. Whiteside of the firm of Fife M. Whiteside, P.C. in Columbus, Georgia. Goldens Foundry is headquartered in Columbus, Georgia.

The initial filings provide very little information regarding Goldens’ Foundry’s trade debt situation beyond the required listing of the top 20 unsecured creditors, which is summarized below.  The statistical information included in the petition states that there are between 200 and 999 creditors, estimated assets of $1,000,0001 to $10 million and estimated liabilities of $10,000,001 to $50 million.

Goldens’ Foundry’s principal secured creditor is Columbus Bank & Trust Company represented by Jason H. Watson of the Atlanta, Georgia office of Alston & Bird LLP.  The initial filings state that Goldens’ Foundry’s pre-petition secured loans and letters of credit from Columbus Bank & Trust Company, taken together, amount to $14,733,218.

Direction of the Bankruptcy

The Debtor has not stated the objective or direction of the bankruptcy.  However, Columbus Bank & Trust Company filed a proposed interim consent order requesting that the bankruptcy court authorize Goldens’ Foundry’s use of cash collateral.  This filing included the following statement:

It is anticipated the Debtor will hire a liquidating officer (the “Liquidating Officer”). The Debtor proposes to pay the Liquidating Officer in the ordinary course pursuant to the Budget. To the extent the Court deems the Liquidating Officer to be a professional and therefore subject to the Carve-Out, then the Carve-Out shall be increased by the corresponding amount set forth in the Budget to pay the Liquidating Officer during the Carve-Out Period.

The intent to appoint a Liquidating Officer indicates that this case may be a liquidating Chapter 11 – a section 363 sale followed by the filing of a plan of liquidation or conversion into a Chapter 7.  Given the likely higher realization of value from the sale of the Debtor’s business operations as a going concern, it can be expected that the Liqidating Officer would evaluate that alternative first.

Prospects for Pre-Petition Claims of Suppliers

As shown in the Debtor’s list of 20 largest unsecured creditors, the Debtor anticipates that the secured creditors to a material extent are “under collateralized”.  This means that the value of the Goldens’ Foundry’s assets pledged to secure its borrowings is less than the amount of the obligations.  Unsecured creditors, including suppliers and other vendors, are ranked below the secured lenders in priority of distributions.  A liquidation of Goldens’ Foundry, whether by way of sale as a going concern or otherwise, is unlikely to result in a distribution to the trade creditors.

Any chance for a distribution to the unsecured creditors will come from recovery from assets of the debtor that have not been pledged to the secured lenders.  In most cases, these unpledged assets primarily consist of bankruptcy preference claims.

Based on the information in the initial filings, we rank this case as “HIGH” on the probability scale for the assertion of bankruptcy preference claims.

Top 20 Unsecured Goldens’ Foundry Creditors

Goldens’ Foundry has listed the following creditors as being its top 20 largest unsecured creditors.   None of the claims were listed as contingent, unliquidated, disputed or subject to setoff.  That column has been omitted in the following table. Additionally, any address and contact information provided by the Debtor for a creditor on the top 20 list has not been included.

As mentioned above, the list includes four secured creditors.  The secured creditors are listed to the extent that the estimated value of the collateral is less than the amount of the secured debt.

Name of Creditor

Nature of Claim

Amount of Claim (If Secured Also State Value of Security)

Columbus Bank & Trust

Promissory Note

Value: $1,215,955.00
Net Unsecured: $5,398,089.32

Crisp County – Cordele IDA

Bond Issue – Series 2007

Value: $1,258,000.00
Net Unsecured: $4,002,000.00

Dev Authority of Columbus GA

Bond Issue – Series 2001

Value: $800,000.00
Net Unsecured: $900,000.00

Crisp County Loan Bd of Commissioners

Promissory Note

Value: $0.00
Net Unsecured: $824,286.24

Perfect Patterns, Inc.

Accounts Payable


Columbus Bank & Trust

Accounts Payable


Georgia Power Co.

Accounts Payable


Crisp County Power Commission

Accounts Payable


Synovus Financial Corporation

Accounts Payable


Machinery Finance Resources

Capital Lease

Value: $1.00
Net Unsecured: $223,057.51

Schnitzer Southeast, LLC

Accounts Payable


The Principal Financial Ins Co

Accounts Payable


Applied Process

Accounts Payable


Porter Warner Industries,LLC

Accounts Payable


Voss Pattern Company

Accounts Payable


Delage Landen

Capital Lease

Value: $0.00
Net Unsecured: $71,573.81


Accounts Payable


J. Smith Lanier & Co.

Accounts Payable


Tennant Financial Services GE Capital

Capital Lease

Value: $1.00
Net Unsecured: $36,114.82

Rex Heat Treat – Alabama,Inc.

Accounts Payable


The Top 20 List does not include: (1) persons who come within the definition of “insider”; or (2) secured creditors, unless the value of the collateral is such that the unsecured deficiency places the creditor among the holders of the largest unsecured claims.

The Top Unsecured Creditor List is never to be considered a waiver of any defense to or “allowability” of a listed claim or an admission of the amount of any listed claim.  It is common for the amount of the claims to shift and sometimes a claim that is initially is undisputed is later disputed.  Creditors should always consult the official claims register.