CFM Enters
Chapter 11
Bankruptcy
By M. D. Drysdale
 

 

Faced with a severe nationwide slump in the sales of new homes that need new stoves and fireplaces, the corporate parent of Vermont Castings filed for Chapter 11 bankruptcy protection last week.

CFM Majestic, Inc. listed unsecured claims of about $18 million in its filing.

Chapter 11 is a bankruptcy procedure that protects companies that have the potential of being reorganized and continuing in business.

"This will buy some time for us to reorganize or sell the business," explained Darrell Olson, vice president of administrative services at CFM in Huntington, Ind.

Vermont Castings plants in Randolph and Bethel have already been shut down through May, and the filing should not have any immediate effect here, Olson said.

CFM, which manufactures stoves and fireplace inserts in Huntington, Ind., and Mexico as well as in Vermont, has been hit with a collapse of demand within the stove market, he said.

"The manufacturing of fireplaces is tied to new home construction; that’s the issue," he explained. The slowdown in home building may be connected to the national crisis in the sub-prime mortgage market, he said.

The Randolph foundry was reduced to a single shift several months ago and shut down altogether early this month, along with the assembly and enameling plant in Bethel. The company employed about 150 people in Bethel and Randolph at the time of the first layoffs.

CFM as a whole employs almost 1000, Olson said. A fourth manufacturing plant in Missisauga, Ontario, was shut down a year ago, he said, and its business sent to the Indiana and Mexican factories. Both those facilities are operating but have been cut back to one shift, he said.

Rumors have surfaced that a buyer may be interested in purchasing CFM, Olson acknowledged, but predicting what might happen would be "pure speculation," Olson said.

He confirmed the assertions of managers here that the Vermont Castings manufacturing plant, and the brand itself, are a successful segment of CFM.

"If I were to speculate on the relative values of the pieces of the company, Vermont Castings would be right up there on the top," he said.

For the last three years, CFM has been owned by Teachers Private Capital, the equity arm of the Ontario teachers’ pension system.