Michael Day Enterprises Inc. files for Chapter 11

Michael Day Enterprises Inc. (Wadsworth, OH) filed for Chapter 11 under the U.S. bankruptcy protection code, but is seeking approval for a Section 363 Sale to Radici Plastics USA, a subsidiary of Radici Group for the North American market, according to a release by Michael Day Enterprises' President Michael Cain. 

Michael Day Enterprises Inc. is a privately owned manufacturer of engineering thermoplastic compounds to the automotive industry and other major markets. Radici Group is a $1.8 billion global supplier of chemicals, plastics and textiles headquartered in Bergamo, Italy.

Cain announced that MDE filed its Chapter 11 bankruptcy petition on Nov. 10 in Akron, OH. Radici has executed an Asset Purchase Agreement with MDE. Radici will be the "Stalking Horse" bidder during the bankruptcy process which is intended to be completed in approximately sixty calendar days. Under bankruptcy regulations other interested parties will also be allowed to bid to buy the assets of MDE. Polymer TransAction Advisors, Inc. (PTA), headquartered in Newbury, Ohio, has been engaged by MDE as its financial advisor on this transaction.

Cain explained that the bankruptcy protection filing is the result of the poor business climate. "MDE has been negatively impacted by the recession, the accompanying downturn in our major markets and the tightening of credit markets," said Cain in the release. "This has made it increasingly difficult for us to obtain the capital needed to support our customers. We have engaged PTA to identify buyers and investors with the capital needed to support our business. Radici Group has the raw material resources, global capabilities and financial strength to allow us to supply our customers and continue to grow our Business. We have secured adequate financing from our lender to provide for the continued operation of the business during the bankruptcy process. Following our emergence from bankruptcy we will have an even stronger capability to serve our customers."

M&A activity has been picking up of late, as evidenced by an uptick of recent transactions reported by other M&A advisory firms and banks.  When asked about this, William Ridenour, President of Polymer TransAction Advisors, said, "It's picking up somewhat but mainly by those bargain hunting. Buyers are mainly consolidators and 'timing buyers' buying troubled companies at the bottom of their economic cycle to ride the recovery curve. We are working with five such buyers right now with this objective.

"A lot of financially troubled businesses are being sold out of foreclosure and bankruptcy. We believe this will continue beyond the first quarter of 2010 as companies fatally weakened by the recession eventually run out of cash. Lending is still very tight and banks are not lending to the auto, construction or other capital good-based markets."