BUSINES - Equipment Manufacturing Firm Files Chapter 11, Events Combined, Including Malfunction of Monitoring Device on Feb. 23

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Eastside Business Journal (Seattle)

Title: Equipment Manufacturing Firm Files Chapter 11

Jeff Meisner EBJ Staff Reporter April 3, 2000

MCM Enterprise Ltd., a Bellevue maker of equipment monitoring devices and large-capacity batteries, has filed for protection under Chapter 11 with the U.S. Bankruptcy Court's Western Washington District. The company's top executive says he hopes to sell the company.

The March 9 filing follows on the heels of a year that began with a great deal of promise for the 20-year-old firm, which reported $3 million in revenue in 1998 and employs 18 people.

MCM designs and manufactures monitoring devices for hydroelectric generators and high-end battery links for companies with heavy power demands. Its customers include the U.S. Army Corps of Engineers, Seattle City Light, B.C. Hydro and Tacoma Public Utilities.

A number of events early this year combined to put MCM in the financial struggle it finds itself in today, says Ernie Hayden, president and chairman.

One of MCM's monitoring devices malfunctioned at an East Coast utility company Feb. 23, causing damage that is still being assessed and investigated by both the utility and MCM.

"One of our HydroScan devices at a power plant back East fell off a large rotor and caused some damage," Hayden says. No injuries occurred as a result of the accident.

The firm was already in a tight cash position before the February incident occurred, Hayden says, and orders MCM was counting on have been delayed as a result of the incident, as did several lines of credit from numerous private lenders.

"We went from projecting what was supposed to be our best year to date to talking about bankruptcy," Hayden says. "We just ended up running out of money real fast."

MCM laid off four employees as a result of its financial woes and has cut back the salaries for three others, he says.

In their efforts to sell the company, Hayden and the rest of the executive team at MCM have begun a valuation process independent of what the court may find.

"Valuations have been done for each product line," Hayden says. "We're also talking to hydroelectric and battery people, including our competition, to see what interest there is from potential buyers."

In most chapter 11 cases, the judge requires the company to submit a plan of reorganization, but MCM has yet to do so in this case.

Hayden says the company's reorganization plan centers around MCM's attempts to find a buyer. The firm's lawyer, Geoffrey Groshong of Seattle-based Reed McClure, could not be reached for comment.

MCM is still servicing its current accounts and orders continue to come in, Hayden says.

According to court documents, MCM reported $657,115 in total assets, including cash, accounts receivable and inventory, and $1,248,742 in liabilities.

Its chief creditor includes New England Electric Resource Inc., a contract-based consulting firm in Westborough, Mass., which claims MCM owes it $62,000. Court documents indicate MCM is disputing that figure.

John Sherman, associate legal counsel for National Grid USA, NEERI's parent company, was not clear on the details of the dispute.

He says the dispute has not been resolved because the NEERI personnel that put together the contracting deal with MCM in 1996 and 1998 are no longer with the company.

MCM's other two top creditors include Bothell-based Applied Technology Services and Kirkland-based Bedford Precision Inc., a machine manufacturer. Ed Schurr, operations manager at Bedford, declined to comment.

MCM owes the two companies $32,000 and $27,000 respectively, according to court documents.

Those documents also show that revenue for the company in the two months ending on March 8 were $113,000 with year-to-date revenues of $164,000. http://www.amcity.com/journals/high_tech/doc/2000/04/03/eastside_story6.html

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-- (Dee360Degree@aol.com), April 03, 2000

Answers

Excuse the typo of the word 'business'in subject line.

Thanks,

Dee

-- (Dee360Degree@aol.com), April 03, 2000.


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