Tactical Holdings Operations Inc. has filed a petition for a Chapter 11 bankruptcy and is seeking a quick sale of its businesses, including Massif Mountain Gear, which makes fire-resistant outdoor apparel for fire-rescue workers, the military and industrial markets worldwide.
Tactical Holding’s other holdings include Altama Delta Corp., Mo-Ka Shoe Corp. and Wellco Enterprises, which design, manufacture and sell 100 percent Berry Amendment compliant footwear for the U.S. Army and other military customers.
The company, which is controlled by the investment firm Golden Gate Capital, has already lined up a $13 million stalking horse bid for Massif Mountain Gear by forming Massif Apparel Enterprises LLC. Dow Jones reported last week that Sun Capital Partners may bid for Massif, which is based in Ashland, OR. Sun Capital owns American Recreation, which owns Kelty, Sierra Designs, Slumberjack, Ultimate Direction and Wenzel.
Massif made its mark developing fire resistance apparel that also offers the waterproof/breathable performance found in modern outdoor technical apparel. Though initially focused on equipping fire-rescure workers, the company has since branched into military and workwear markets. Tactical Holdings acquired a 75 percent stake in Massif Outdoor Gear in 2009.
Tactical’s petition says it needs to sell its operating units within two months to avoid losing 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,” according to an affidavit filed by Carlin Adrianopoli, a consultant now working as Tactical’s chief restructuring officer.
Court documents indicate it may be more difficult to sell the footwear businesses.
Wellco announced Thursday it will close its factory in Morristown, TN, which employs 60 manufacturing boots for the U.S. Army and other military customers. Wellco opened the factory in 2010, three years after Golden Gate Capital took the company private with plans to turn it around by entering civilian consumer markets. On its website, Wellco describes the 100,000-square-foot plant as the largest producer of Berry Amendment compliant boots in the United States.
In his affidavit, Adrianopoli attributes Tactical’s decision to file for Chapter 11 to a “perfect storm” of events dating back to 2012, when the company embarked on a restructuring amid an investigation of Wellco’s sourcing practices.
One ongoing investigation is probing the country of origin for several boot styles the company produced and sold between 2008 and 2012. The Berry Amendment requires Department of Defense buyers to favor products made in America. Wellco cooperated fully with both investigations, but the related expenses and personnel demands have further strained the debtors’ liquidity, according to Adrianopoli’s affidavit.
“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,” according to the affidavit.
Tactical’s 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 and Travel Leather Co., $200,798. 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.