Exclusive Reports From the July 20, 2001 print edition

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Great Western says it was felled by Y2K FIX

Shelly Strom Business Journal Staff Writer

Y2K has claimed another victim, this time 18 months after the millennium party ended.

Great Western Chemical, one of the nation's largest chemical distributors, sought the protection of bankruptcy court to reorganize after running into problems with a new computerized reporting system.

The company, which owes creditors $60 million, filed for Chapter 11 bankruptcy reorganization July 3. In a statement regarding its filing, the company said a faulty computer reporting system caused irreparable damage to the company and forced it into Chapter 11.

Although the privately held, $253 million (2000 revenue) company tried to stem its losses by selling some divisions and by hiring a turnaround expert this spring, it wasn't enough. With more than 1,000 creditors to satisfy and just $21.2 million in assets, Great Western's hand was forced, officials said.

The 45-year-old company was started by the same family that founded McCall Heating Oil in 1939. It provided centralized warehousing, drumming, testing, blending, repackaging and product transfer services for chemicals.

Prior to its struggles, the company conducted operations at 21 branches throughout the country. It had 404 employees before the division sales. As of July 3, it employed 31.

Officials at Great Western blamed the disaster largely on the failure of a new computer accounting and inventory software system installed to avoid pitfalls associated with date change into the year 2000.

"The loss of money was substantially related to a loss of credible information," turnaround expert Conrad Myers said. He said the company appears to have gone at least several months without reliable accounting data.

Myers said when he came on board in March, the company appeared to be beyond salvage. "I reviewed GW's ongoing business losses and determined that they could not be reversed within any reasonable period of time and that the company was not realistically capable of reorganization or refinance and would be unable, despite over one year of concentrated activity, to be capable of consummating a sale of its business in its entirety," he said in a bankruptcy filing.

Acting at the behest of Great Western's board of directors, Myers said in court documents that he "participated in GW's decision that the company move rapidly to a piecemeal sale of its branch loca-tions ... It is my opinion that the rapid but orderly piecemeal sale and collection of GW's remaining accounts receivables of the various branches will maximize value for the creditors of GW."

Myers also said between May 26 and July 2, he "facilitated the sale of 20 separate branch locations in 11 separate sales transactions and negotiated 10 separate collection agreements with these buyers to pursue the collection of GW's trade accounts receivable for the benefit of GW." In all, the company received approximately $9.5 million for its divisions, which at the time had total accounts receivable of approximately $20.5 million. Court documents do not indicate whether the company will receive revenue from those accounts.

Myers said he's not charged with returning operations to viability. "My mission is to obtain as much value from assets of the company as possible, to secure the highest potential economic results for the creditors of the company. I get involved where there's been a train wreck. I come along and do triage and try to salvage as many living bodies as possible," he said. In order to compensate Myers for further work, Great Western must have court approval.

The company has yet to settle on a buyer for its cleaning and sanitation division, which supplies chemicals to food processors. That business has revenue of approximately $7 million, and has profits, Myers said. The operation has branches in Canada and Mexico.

According to court documents, the company owes three creditors holding secured claims $11.3 million. Wells Fargo, acting as an agent for Allstate Life Insurance Co. of New York, holds the largest claim at $10.4 million. The companies allege in court documents that they are parties to a security agreement from April 2000 that provides Wells Fargo an interest in various assets.

Suppliers Celanese of Austin, Texas, and Shin-Etsu Microsi of Portland made individual secured claims, with values of $300,000 and $539,000 respectively.

-- Anonymous, October 03, 2001

Answers

SOME MORON ON GICC cut and pasted the above directly from Poole. The word "FIX" was not in the Oregon story.

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=006ZZr

-- Anonymous, October 03, 2001