Firm vies to escape bankrupt status Bryn Awel seeking to be free to sell assets to Driggs unit

September 24, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Bryn Awel Corp. filed an emergency motion in U.S. Bankruptcy Court in Baltimore yesterday to dismiss an action by a competitor that would keep the Towson-based paving and construction company in Chapter 11 bankruptcy. If the motion is approved, the 33-year-old company would be free to sell its assets to an affiliate of the Driggs Corp.

Bryn Awel was forced into involuntary bankruptcy Sept. 19 by competitor Redland Genstar Inc. and three other creditors. The same day, it signed an agreement to sell its assets to Driggs, a Capitol Heights-based construction company.

"We think our position is correct and our chances are good" to dismiss the bankruptcy filing, said J. Thomas Hood Inc., Bryn Awel's chief financial officer.

Redland Genstar, a Hunt Valley-based company that employs about 800 workers and runs rock quarries and concrete plants as well as asphalt and sand and gravel operations throughout Maryland, claims that it is owed $2.6 million for materials it sold to Bryn Awel.

Redland Genstar pushed Bryn Awel into bankruptcy about a month after negotiations to acquire Bryn Awel fell through. That filing froze the Driggs' deal.

"We think it is inappropriate that they use the bankruptcy court to try and bring us to the table," Hood said.

He referred to Redland Genstar's tactics as a "scorched-earth policy."

Kevin E. Sniffen, Redland Genstar's general counsel, said the creditors forced Bryn Awel into bankruptcy because "we weren't getting any answers in terms of commitment of payment. We were left with no other choice but to protect our significant investment." He said the decision was not made to squelch the deal between Bryn Awel and Driggs.

The three other creditors listed in the bankruptcy filing are: Joseph J. Hock Inc., which is owed $625,091; Paul J. Rach Inc., $273,588; and Priceless Industries Inc., $24,828.

Hood said Mercantile-Safe Deposit and Trust Co. is Bryn Awel's lead lender and its largest secured creditor. Mercantile, which was not listed as a creditor in the filing, has lent the company about $14 million, Hood said.

Redland Genstar pushed Bryn Awel into bankruptcy after it learned from other creditors that a "repayment plan to creditors was speculative and extremely risky," according to a Redland Genstar release.

Redland Genstar plans to submit a plan to bankruptcy court for the purchase of Bryn Awel for all creditors to consider, the company said.

"Redland Genstar believes that its plan would be eminently more beneficial to unsecured creditors than the vague and risky proposal apparently tendered by Bryn Awel and the Driggs Corp. to Redland Genstar and other creditors," the company said.

Bryn Awel has worked on several major projects, including resurfacing the Baltimore Beltway, Interstate 695; the Washington Beltway, I-495; and sections of Interstate 95, Hood said. It competes with Redland Genstar on paving sidewalks, roadways and parking lots, he said.

Hood said Bryn Awel hasn't been able to overcome effects of the 1990-1991 recession, which curbed government spending for highway projects.

Bryn Awel has $45 million in revenues, Hood said, but has lost about $10 million since 1992 and has cut its work force to 250 employees from 500 during the past 18 months. It sold an asphalt plant and auctioned off equipment of a division raising about $2 million last December. In January, it began looking for a partner and entered into negotiations with Redland Genstar. The negotiations fell apart in August, Hood said.

After being pushed into bankruptcy, the company struggled to meet payroll because the receipt of a $400,000 receivable was frozen by the filing, the company said in court filings.

Hood said Bryn Awel's future is uncertain.

"It depends on if people keep paying us," he said. "If our customers keep paying us we can go on for a while."

Pub Date: 9/24/96

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