'We got caught in the crossfire;' Vitro America CEO talks bankruptcy, sale
On April 6, Vitro SAB subsidiaries Vitro America, Super Sky International, Super Sky Products and VVP Finance Corp. filed for relief under Chapter 11 of the U.S. Bankruptcy Code. Officials also announced they had entered into an agreement to sell substantially all of the assets of Vitro America and Super Sky to an affiliate of Grey Mountain Partners, a private equity firm in Boulder, Colo.
Vitro America President and CEO Arturo Carrillo spoke with Glass Magazine's Jenni Chase about what led to the bankruptcy filing and consequent decision to sell, as well as what the future holds for the employees, customers and suppliers of Vitro America and Super Sky. Excerpts from the interview follow:
Can you briefly describe the situation leading up to the bankruptcy filing and the subsequent decision to sell Vitro America and Super Sky?
Back in 2008, Vitro had derivates related to natural gas. When the price of natural gas collapsed, Vitro began negotiations to settle these claims and claims from bondholders, and here in the U.S., we were hopeful there would be a peaceful resolution. However in November 2010, a few dissident bondholders filed involuntary bankruptcy proceedings against all Vitro U.S. subsidiaries ... so Vitro America, Vitro Packaging, Vitro Chemicals and Super Sky Products became involved in this litigation.
We fought this for many months. We went to court on Feb. 24, when the judge suggested we give mediation another chance. Mediation did not resolve the issue, so we went back to court last week. During the trial and the following days, it became apparent that Vitro America, Super Sky and its subsidiaries most likely would not win, either at that specific trial or in resulting litigation.
We could not in good faith keep asking our suppliers to keep extending us credit in a pre-bankruptcy manner. So, we decided to implement what we had always thought was a contingency plan. We realized that it was better for Vitro America and Super Sky to get out from under this litigation, to give certainty to our suppliers, customers and employees that business would continue.
This is not because of us. It's not because of something we did. It is not because our bank wasn't happy with us or because our suppliers came after us. This has been exclusively related to the Vitro bond situation. Our bank continues to support us through the sale process, and our parent company has supported us strongly through all of this. We own a substantial part of our real estate; we own most of our equipment; and our inventory and account receivables are above our bank lines. This is a different type of process than what others have been through. We clearly could have kept going, had this litigation not caused disruptions.
What immediate impact does the bankruptcy filing have on Vitro America and Super Sky operations, in terms of production and employees? Do you anticipate layoffs pre- or post-sale?
With employees, absolutely nothing. We will continue to be able to pay our full-time and temporary employees, and our subcontractors. From a customer perspective, today our trucks are going out to deliver glass; our trucks are going out to job sites to install glass. We will continue operating a normal course of business, from our customers' and employees' perspective.
We haven't planned any layoffs. We're not using this as a way to restructure the company. This was never a Vitro America issue.
Post-sale, I anticipate things won't look that much different than they do now. We will certainly be asking our customers for their support, and we will try to work with our suppliers through this. Vitro America's success will be based on the support of employees, customers and suppliers. We're very humbled. We never thought we would be here.
Independent of Vitro SAB and its financial situation, how would you describe the health of Vitro America and Super Sky?
We're not immune from the industry, but Super Sky continues to be a successful company. Clearly, it is smaller than it was two years ago in terms of backlog. A lot of the same would apply to Vitro America and Binswanger. Some branches are doing better or worse than others ... we're blessed to have significant operations in Texas, a state that has ridden the storm a little better than most other regions. Our March sales were one of the best they've been in the past 24 months.
What is the most important thing that you want your customers to know?
We are still here. We will continue to operate and make every effort to keep every commitment, as we have always done. This is a very old company and we have been through a lot. We will get through this, and we humbly ask for support through this process.
What else do you want the industry to know beyond what's in the official release?
We never thought we'd be here. This is not about us. We got caught in the crossfire, and it is unfortunate. I apologize for the stress that we have caused people. I think with everyone's support, this company will continue.
Chase is editor of Glass Magazine. Write her at email@example.com