By Jim Johnson
SENIOR STAFF REPORTER
Published: April 9, 2014 3:41 pm ET
Updated: April 9, 2014 3:48 pm ET
Image By: Hedwin Corp.
Hedwin's Cubitainer collapsible packaging for liquids have been on the market for more than 60 years.
A generations-old industrial plastics packaging company, which has been owned by employees for the past decade, is under bankruptcy court protection as a sale to long-time associate is in the works.
Hedwin Corp. of Baltimore lists debts of slightly more than $18 million and assets of $15 million, according to a Chapter 11 filing this month in the U.S. Bankruptcy Court in Baltimore.
Hedwin, which dates back to 1946, makes products including pail and drum liners, blow molded containers and a trademarked collapsible liquid container called the Cubitainer.
But a June 13, 2013, fire at the company’s Baltimore facility helped push Hedwin to the financial brink. “The fire negatively affected the debtor’s operations, causing a shutdown in certain assembly lines,” the bankruptcy court filing states
“A combination of factors and events has negatively impacted and continue to adversely affect the debtor’s business operations and its financial condition,” the filing states.
“Fluctuating and higher resin prices,” “margin compression” and “delayed capital investment in equipment and production processes, resulting in increased production costs and inefficiencies” all contributed to the company’s problems, the filing states. “As a result, the debtor is suffering a liquidity crisis and continues to suffer major cash flow problems.”
Tokyo-based Fujimori Kogyo Co. Ltd. is the leading candidate, at this point, to purchase Hedwin.
Fujimori Kogyo’s interest in Hedwin is not entirely out of left field. The company has produced Cubitainers, now called Fujitainers by that company, under license from Hedwin for 50 years. The company also has a presence in the United States through its subsidiary Zacros America Inc., which makes film and packaging.
Hedwin, founded in 1946 by Lenox Burkhed and Tom Winstead, was sold to Solvay SA in 1958 and remained under the control of that global plastics and chemical firm until 2004. That’s when workers took over the site through an employee stock ownership plan.
Coverage of the ESOP a decade ago indicated that most of the company’s 380 workers had an ownership stake in Hedwin.
Hedwin had sales of $44 million and gross profit of $4.5 million in 2012, the bankruptcy court filing indicates. Those numbers slipped to $43.5 million in sales and a gross profit of $3.4 million in 2013.
Facing the liquidity and cash flow problems, the company brought in Charles Deutchman of Shared Management Resources Ltd. of Pepper Pike, Ohio, as chief restructuring officer in October. By December, Mesirow Financial Inc. was hired as an investment banker to explore what the filing called “strategic alternatives.”
“Absent a sale, the debtor would have to immediately terminate its employees and begin the wholesale liquidation of its assets to the detriment of the estate and its creditors,” the filing states.
Chapter 11 gives a troubled company protection from creditors through bankruptcy court and allows operations to continue as reorganization takes place.
Business speak can be dreadfully dull, but Fujimori Kogyo is colorfully described as the “stalking horse” bidder to purchase Hedwin.
Hunters can hide behind so-called stalking horses as cover to allow themselves to get close enough to prey that would otherwise flee out of range if they detected humans.
So Fujimori Kogyo, by making this initial bid, helps set the market for the sale of the assets and provides a minimum bid, essentially a cover, during the bankruptcy court auction.
Along with its main facility in Baltimore, Hedwin also has a warehouse and assembly location in Reno, Nev.
The company now has about 300 employees, including some 50 salaried workers and 250 hourly workers. | 
