100 jobless as bottler closes abruptly

October 31, 1992|By Phyllis Brill and Frank Lynch | Phyllis Brill and Frank Lynch,Staff Writers

Chesapeake Beverage Corp., a soft-drink bottler based in Havre de Grace, was shut down abruptly yesterday, leaving more than 100 employees out of work -- and without their last two-week paycheck.

Officials of the company, which had filed last year for protection from its creditors under federal bankruptcy law, gathered employees in the cafeteria shortly before noon, told them of the plant's closing and sent them home.

Joel Sher, a court-appointed trustee for Maryland National Bank, said the decision to close the plant came late Thursday night.

"I was called in to take a look at situation on Oct. 23, and what I found can only be described as incredible," said Mr. Sher.

What he said he found was an "absence of management" -- no cash on hand, taxes amounting to more than $300,000 that had not been paid over several months, unpaid union benefits and checks bouncing.

"I tried to find alternative sources [to pay employees], but was unsuccessful," said Mr. Sher.

"So rather than allow this situation [to] go deeper into debt, a decision was made to shut down."

Mr. Sher said that two potential buyers have been considering the firm, and it possibly could open under new ownership.

"I can't forecast a target, but in the meantime we are going to assistall the employees in getting unemployment [benefits]," he said.

As a precaution, Chesapeake officials called Havre de Grace police to the plant, located in the Chesapeake Industrial Park on Old Bay Lane, before making the announcement. Police reported no incidents.

Bruce J. Hegstad, who was Chesapeake's president, said that once the trustee took over Oct. 23, he was no longer involved.

"A lot of money was put into the plant after the filing of Chapter 11 [bankruptcy], but it was never able to get where we wanted it to be," Mr. Hegstad said.

In June 1991, Chesapeake sought protection from creditors under the U.S. Bankruptcy Code after a plan to merge the company with a bottling firm in Oklahoma was put on hold.

At the time, the company listed $4.25 million in assets and $6.3 million in liabilities.

The company, which reported revenues of $4 million in 1990, said it owed Maryland National Bank more than $3 million and had debts to numerous suppliers.

Despite the reorganization filing, Chesapeake Beverage had no plans for layoffs at its Havre de Grace production facility, Mr. Hegstad said in a June 1991 interview.

But Mr. Hegstad, then a major investor in the bottler, insisted at the time that the company's business had not been hurt by the Chapter 11 filing and that it would survive.

Mr. Hegstad, former president and CEO of the Kirschner Medical Corp., and four others purchased the 68,000-square-foot bottling plant and the company it housed, Zeltzer Seltzer brand of fruit sodas, from the Anheuser-Busch Beverage Group in August 1988 for an undisclosed amount.

H. J. Lynch, regional director of the United Food and Commercial Workers Union Local 27, which represents Chesapeake employees, said last night that the closing did not surprise him.

"It's a sad situation, but it's just been getting progressively worse up there," he said.

He said the union would talk with its attorneys about possible arbitration, and "get in line as creditors."

News of Chesapeake's closing troubled Harford County Executive Eileen M. Rehrmann, a spokesman said.

"The county executive is very concerned about this because 110 jobs are at stake," said George Harrison, county government spokesman.

The executive hopes another operator takes over the plant so the jobs can be preserved, Mr. Harrison said.

"But things are so complicated, we don't know how much of a real possibility that is," he added.

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