M&T Bank presses bankruptcy court for Powell Steel closure
A bankruptcy judge could decide in December whether Lancaster County-based Powell Steel Corp. can stay in Chapter 11 reorganization or whether it closes the company and allows creditors to liquidate assets.
Two hearings are set, one for Dec. 3 and one for Dec. 17, in front of Judge Magdeline D. Coleman with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to consider motions from creditors, according to the court.
One motion is from Manufacturers and Traders Trust Co. Inc., the parent of M&T Bank, which asked the court Nov. 15 to waive an automatic stay so that it can proceed to liquidate its collateral in Powell Steel and pursue state court proceedings, according to the court filing.
Powell Steel has loan obligations worth more than $3.2 million with M&T, yet the bank says a tabulation of its collateral in the company amounts to just under $2.8 million, according to the court documents. In addition, M&T says that collateral continues to lose value, citing Powell Steel’s most-recent financial report from August, according to the documents.
The bank says that Powell Steel has failed to issue a wind-down plan in an agreed time period and continues to use cash to conduct business as usual, according to the court documents.
“Accordingly, there is no prospect for an effective reorganization,” M&T’s lawyer, Carol Ann Slocum of New Jersey-based law firm Klehr Harrison Harvey Branzburg, wrote in the court document.
Powell Steel President Stephen Powell and the company’s attorney, Albert A. Ciardi of Philadelphia-based Ciardi Ciardi & Astin, did not immediately return calls and emails for comment.
Powell Steel, a structural steel fabricator and construction company based in Pequea Township, was founded in 1993. In 2010, the company was named one of the nation’s most successful black-owned companies by Black Enterprise magazine in New York. Powell Steel filed for Chapter 11 reorganization in February.