King Mountain files bankruptcy after $75.5 million excise tax bill

By Sarah Lizee

Olympia, Wash., Sept. 29 – King Mountain Tobacco Co., Inc. made a voluntary Chapter 11 bankruptcy filing on Friday in the U.S. Bankruptcy Court for the Eastern District of Washington.

Chief executive officer and corporate vice president Truman J. Thompson said in a declaration that the Department of Treasury, on behalf of the Alcohol and Tobacco Tax and Trade Bureau, sent the debtor a final notice and demand for repayment of outstanding federal excise taxes.

According to the government’s calculation, the amount owed is $75.47 million, consisting of $38.33 million of principal, $18.34 million of interest, $9.14 million for failure to file timely and another $9.67 million for failure to pay timely.

The government threatened to levy against the debtor’ assets if payment was not made within 30 days of the debtor’s receipt of the demand letter.

Thompson said that the company is not in a financial position to repay the amount owed to the Alcohol and Tobacco Tax and Trade Bureau, and a levy of the debtor’s assets would likely result in the cessation of operations and the loss of jobs.

In its petition, the company listed $10 million to $50 million of assets and $50 million to $100 million in debt.

King Mountain’s largest unsecured creditors are the Department of the Treasury Tobacco Tax & Trade Bureau based in Cincinnati, with the $75.47 million federal excise taxes claim; the U.S. Department of Agriculture based in Kansas City, Mo., with a $5.61 million interim payment plan agreement claim; the U.S. Food and Drug Administration based in Saint Louis, with a $2.94 million repayment agreement claim; and the State of Indiana Office of the Attorney General based in Indianapolis, with a $2.52 million settlement agreement claim.

King Mountain Tobacco is a Native American owned and operated tobacco manufacturer based in White Swan, Wash. The Chapter 11 case number is 20-01808.

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