Judge: Tannery can borrow $550,000

By Christopher Cousins, BDN Staff
Posted Nov. 18, 2010, at 11:05 p.m.

BANGOR, Maine — Prime Tanning-Hartland’s bid to remain in business while it goes through Chapter 11 bankruptcy received a crucial boost Thursday when U.S. Bankruptcy Judge Louis H. Kornreich granted provisions that will allow the company to continue operations.

Prime, formerly known as Irving Tanning Co., filed for bankruptcy on Monday, claiming between $1 million and $10 million in debt. On Thursday the company was granted permission to borrow $550,000 from the Maine Rural Development Authority as well as use a $4 million line of credit through a firm called Porter Capital Corp., which Prime already had been working with.

“This means Prime has the operating capital it needs to buy hides and continue operations,” said Robert Keach, a Portland-based attorney who represents Prime. “It was all good news today for Prime. This enables the company to go forward on a better-than business-as-usual pace.”

Prime President Paul Larochelle has told the Bangor Daily News that the company has a considerable backlog of orders and would be profitable if it weren’t for past debts associated with litigation and closing other facilities.

The bulk of the Maine Rural Development Authority money will be paid to Tasman Industries of Louisville, Ky., which supplies Prime with the hides it needs to create leather. The line of credit from Porter will be used to make payroll and pay for certain necessities such as transportation and warehousing costs.

After making a $550,000 payment to Tasman, Prime will still owe the company $163,260, which it has agreed to pay within 60 days, according to Kornreich’s orders, which are posted on the court’s website. In the meantime, Tasman has agreed to sell Prime up to 10 loads of hides on credit “at any particular point in time,” ac-cording to the documents.

Another hearing involving the bankruptcy case is scheduled for 10 a.m. Dec. 8 in U.S. Bankruptcy Court in Bangor. Prime, which claims some $30 million in leather sales annually, employs 178 people at its plant in the Somerset County town of Hartland and does not anticipate any layoffs in the short term, according to Larochelle.

“It’s very good news for the company that it received all of the relief it sought,” said Keach.

http://bangordailynews.com/2010/11/18/business/judge-tannery-can-borrow-550000/ printed on September 20, 2014