The Star Beacon; Ashtabula, Ohio

Reality Check

June 25, 2008

Sale of factory to Canadian firm a loss-loss for creditors

NEO Plastics was 2001 ‘Best of the County,’ according to Growth Partnership

Growth Partnership for Ashtabula calls the sale of NEO Plastics to RTS Companies of Canada a “win-win situation” for RTS Companies (U.S.) Inc. and Ashtabula County.

Windy Porter of Mega Plastics in Ravenna calls it something else.

“I think it stinks,” says Porter, co-owner of the 10-employee plastics pigments firm. “It’s not (a win-win) for the people (NEO) owned money to. They lied.”

Mega Plastics is one of dozens unsecured creditors far behind the primary, secured lienholder, National City Bank, which held cognovit promissory notes and cognovit guaranties that provided a fast track to judgment.

NEO filed for Chapter 11 bankruptcy protection in February 2007; the action was dismissed in October. Skutch Co. of Toledo was retained as receiver to find a buyer for NEO’s real estate and equipment.

Christopher Parker, Toledo attorney for the receiver, says that, based upon an investigation that was conducted prior to the sale, RTS’ offer of $880,000 was more than what could have been realized in a public distress sale of the company.

A court hearing to receive any objections to the sale had been scheduled for Wednesday but was postponed.

Only back real-estate taxes and National City Bank, by virtue of its secured position, will receive payment from the sale. Even so, the Cleveland bank will stand to lose a substantial portion of its investment.

In a news release from Growth Partnership, Mike Panayi was identified as an RTS partner. The Star Beacon’s calls to RTS’ Panayi in Waterloo, Ontario, were not returned.

According to the GP news release, GP made the deal possible.

“I think it is a given that RTS Companies (U.S.) Inc. would not be there if it had not been for the Growth Partnership team,” the GP release quotes from Panayi’s letter. “We would have walked away from the acquisition of the land, building and equipment at 2900 Industrial Road (sic) long ago had it not been for GP’s continuous involvement on a daily basis, most times several times a day,” the release said.

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