GPX International Tire files for Chapter 11, cites 'crippling' duties

By Angela McDaniels

Tacoma, Wash., Oct. 27 - GPX International Tire Corp. has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Massachusetts, according to a company news release.

The court filing will only affect GPX and not its foreign subsidiaries. The European operations will be wound down.

The company said the purpose of the reorganization is to separate its operations into three distinct businesses and to then sell them.

GPX expects to complete the following sales by Dec. 31, pending approval by the bankruptcy court:

• Alliance Tire Corp. will acquire GPX's U.S. operations, including its assets, customer relationships, warehouse footprint, worldwide rights to the Galaxy and Primex brands, the company's medium radial truck tire distribution business and its South African entity, GPX Tyre South Africa (Pty.);

• Dynamic Tire Corp., the company's Canadian subsidiary, will become a separate entity engaged in the sale and distribution in Canada of Galaxy and Primex brand off-the-road tires, the sale and distribution of medium radial truck and passenger car tires and private label sourcing. It will be acquired by a management buyout team led by Robert Sherkin and Peter Koszo; and

• GPX is working with a potential buyer for its solid tire business as well as its Gorham, Maine, Red Lion, Pa., and Hebei, China, manufacturing facilities. The company said it expects to have definitive agreements in place prior to closure of the other sales.

The company listed asset and liabilities of more than $100 million each.

The largest unsecured creditor is U.S. Customs and Border Protection of Long Beach, Calif., with a claim of $5.66 million. The only other unsecured creditors with claims over $1 million are Tianjin United Tire and Rubber of Tianjin, China, with a claim of $1.76 million and Airboss of America Corp. of Kitchener, Ont., with a $1.41 million claim.

The Chapter 11 filing follows the Antidumping/Countervailing Duty inquiry begun by the Department of Commerce in June 2007. GPX said this resulted in crippling (44%) duties levied against its Starbright facility "while leaving all other major Chinese off-the-road tire manufacturers with nominal or manageable duties."

The company filed an appeal of the duties. According to the GPX release, the U.S. Court of International Trade ruled on Sept. 18 that the Commerce Department's application of its methodologies in calculating Starbright's duties was "unreasonable" and therefore "unlawful" and that the department's decision "was arbitrary and capricious and unsupported by substantial evidence."

GPX said that due to the "devastating and irreversible financial impact" of the duties on the Starbright manufacturing facility and on GPX as a whole, it is not able to wait for a final decision on the duties before completing the sale process.

GPX makes specialty off-the-road tires for the agricultural, construction, materials handling and transportation industries and is based in Malden, Mass. Its Chapter 11 case number is 09-20170.

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