Metal Partners Rebar files Chapter 11 bankruptcy, plans to sell assets

By Caroline Salls

Pittsburgh, June 17 – Metal Partners Rebar, LLC filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Nevada and plans to sell all or substantially all of its assets through a court-supervised auction and sale process.

The company entered into a stalking horse bid agreement with an entity controlled by majority owner and manager Jose D, Carrero.

Chief financial officer Joseph Tedesco said in a statement filed with the court that he will become the CFO of the Carrero entity if it is the winning bidder for the Metal Partners assets.

Tedesco also said Traxys North America LLC filed a complaint on April 2 in the U.S. District Court for the Southern District of New York seeking an injunction and monetary damages against numerous defendants, including the Metal Partners debtors and JPMorgan Chase Bank, NA, in connection with a joint venture agreement for the purchase, fabrication and sale of rebar products.

Traxys alleges that monies collected from the sale of products under the joint venture agreement was not properly accounted for and distributed and that the defendants breached a related settlement.

On April 8, Traxys also filed a complaint in the District Court for the State of Nevada, County of Clark, seeking delivery of inventory and rebar materials allegedly located at Metal Partners’ facilities in Las Vegas, as well as filing a complaint on April 9 in the Superior Court of the State of Delaware seeking a “writ of replevin” for steel reinforcement materials located in New Castle, Del.

In addition, Tedesco said Metal Partners has suffered from operating losses over the past four years and was declared in default on its pre-bankruptcy credit agreement in December 2019 because its existing debt exceeded the borrowing base by more than $10 million.

A forbearance agreement related to that default expired on Feb. 28.

In conjunction with the bankruptcy filing, Metal Partners is seeking court approval to obtain $35 million in debtor-in-possession financing from JPMorgan Chase Bank, NA and to use JPMorgan’s cash collateral.

The financing will mature on Aug. 15.

Interest on revolving loans will accrue at Libor plus 300 basis points, and interest on term loans at Libor plus 375 bps.

A total of $15 million of the DIP financing will be available on an interim basis.

According to court documents, Metal Partners has $10 million to $50 million in assets and $50 million to $100 million in debt. As of Dec. 31, the company said it had $73.86 million in total assets and $77.5 million in debt.

The company’s largest unsecured creditors are Gerdau of Sayreville, N.J., with a $4.98 million vendor claim; Commercial Metals Co. of Irving, Tex., with a $4.62 million vendor claim; Consolidated Construction Products Inc. of Andover, Ohio, with a $2.34 million vendor claim; Steel Dynamics – Roanoke, of Roanoke, Va., with a $1.55 million vendor claim; Bayou Steel Group of Dallas, with a $1.46 million vendor claim; and Stamford Metal Group of Westport, Conn., with a $1.38 million vendor claim.

Larson & Zirzow LLP is representing Metal Partners in its Chapter 11 proceedings.

Metal Partners is a fabricator of reinforcing bars and other steel products. The Chapter 11 case number is 20-12878.

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