Trade Resources Company News Tactical Holdings Has Filed a Chapter 11 Bankruptcy Petition in U.S. Bankruptcy Court

Tactical Holdings Has Filed a Chapter 11 Bankruptcy Petition in U.S. Bankruptcy Court

Tactical Holdings, a major supplier of military footwear, has filed a Chapter 11 Bankruptcy Petition in U.S. Bankruptcy Court in the District of Delaware, and is seeking a quick sale of its businesses. The company’s footwear businesses include Wellco Enterprises, Altama Delta Corp., and Mo-Ka Shoe Corp. It also owns Massif Mountain Gear Co., which specializes in fire and flame resistant apparel.

Tactical Intermediate faced a severe liquidity crisis in the wake of declining performance and government investigations, according to an affidavit by Chief Restructuring Officer Carlin Adrianopoli.

The decision to file for Chapter 11 was the culmination of a “perfect storm” of events that date back to 2012, when the company underwent a restructuring and first faced an investigation into one of its footwear subsidiaries, Wellco.

One investigation, now concluded, concerned a transaction between Wellco and an entity allegedly located in Zimbabwe, while an ongoing investigation is probing the country of origin for several boot styles produced and sold between 2008 and 2012. Wellco cooperated fully with both investigations, but the related expenses and personnel demands have further strained the debtors’ liquidity.   “Following the debtors’ out-of-court restructuring in 2012, plant inefficiencies, manufacturing concerns, reduced military purchases and difficulty with government contracts has led to a run on operating margins and tremendous stress on liquidity,” Adrianopoli said.

The company said it needs to close sales for its operating units within two months in order to maximize value, since much of their value is tied to government contracts.

"If the debtors are unable to quickly transition the programs to buyers, the government will be forced to seek alternative sources for its purchases,” Adrianopoli said.

Tactical Intermediate has lined up a $13 million stalking horse bidder for the Massif unit, an acquisition vehicle named Massif Apparel Enterprises LLC, but has yet to tap a stalking horse for the footwear business.

Tactical Intermediate, whose ultimate equity owner is Golden Gate Capital, listed approximately $57.7 in secured debt, including $48 million owed Wells Fargo Bank NA under a first-lien credit agreement and about $8.7 million due under a secured promissory note from a Golden Gate affiliate, according to court documents.

The filing comes as Wellco Enterprises this week announced plans to close its plant in Morristown, TE, affecting approximately 60 jobs. Reports blamed the closing on reduced demand for combat boots with the wars in Iraq and Afghanistan coming to an end.

The top unsecured trade creditors included Antex Knitting Mills, owed $776,208; W.L. Gore, $695,230; S.B. Foot Training Co., $654,310; Tasman Leather Group, $581,984; Vibram USA, $443,707; CAPPS Shoe Co., $335,954; Travel Leather Co., $200,798; CaribEx Worldwide, $173,048; Lakeway Container, $138,695; and Stanbee Co., $138,539. Other unpaid trade creditors included Evercapital shoes Ltd., $90,269 and Jade Apparel, $88,974., Vulcan Corp., $86,339; A. Lyons & Co., $82,004; Synergy Manufacturing, $66,280; Enefco International, $50,472; Compounding Solutions LLC, $46,771.

Major non-trade unsecured creditors include Kirkland & Ellis, a law firm, owed $2.06 million; Puerto Rico Industrial Development Co., $472,424; and Manpower, $104,281.

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Wellco Parent Files for Bankruptcy