Fab-Knit Ltd., which is doing business as Reebok Team Uniforms, abruptly shut its doors last week and laid off the majority of its employees. The move by the company, which filed for Chapter 11 bankruptcy protection in January (SEW_0505), is curious since it had just received court approval for DIP financing the prior week. The DIP financing was provided by Wells Fargo and was used to pay off all pre-petition debt to the same bank. A call to Fab-Knit’s toll-free number resulted in a message that indicated that the company would be closed “until further notice”. It did give an option to reach specific employees by extension and said that their was a small staff remaining.

As another twist to this story, Fab-Knit filed a complaint with the court last week against one of its sales agencies, E.C. Frazier & Associates, and its principal, Chuck Saul. Fab-Knit, and its CEO Robert Landon, are seeking payment of debt owed to the company and also asking the court to subordinate the unsecured debt owed to Frazier below other unsecured creditors, claiming that the agency, Saul, and his associates were one of the primary reasons the company was forced into bankruptcy.

According to Court documents obtained by Sports Executive Weekly, Fab-Knit alleges that Frazier owed the company roughly $311,000, while the company owed about $123,000 to Frazier. E.C. Frazier has represented Fab-Knit and its predecessor company, Anderson Industries, since 1988 and accounted for 60% to 65% of total company sales at one time. Frazier covered 22 states for the company.

SEW last week spoke with Chuck Saul, who indicated that the issue with Fab-Knit started in December when Frazier filed suit against Fab-Knit for unpaid commissions and other monies owed. Saul also said he was forced off the Board of Directors of Fab-Knit, Ltd in October 2004, a seat he received after acquiring a 12% stake in the company through a cash investment.

“We have lost our investment, our commissions, and money owed us for product we sold to Fab-Knit,” said Mr. Saul.
Fab-Knit claims to have terminated E.C. Frazier & Associates as a member of its sales force because the agency was promoting conflicting lines and also accused Frazier of running a “smear campaign” after the termination. Saul said much of the issue is that Fab-Knit got into categories already carried by his agency. As an example, he pointed to the fact that he once sold All-Star belts to Fab-Knit, but the company then decided to get into belts. He said the same thing happened with socks, product Saul said he once sold to Fab-Knit through Twin City Knitting. Once Landon decided he would do his own socks, he allegedly told Frazier to drop Twin City. Saul told SEW he declined, stating that he did more business with Twin City in socks than in all of his Fab-Knit categories.

The Fab-Knit claim also alleges that Frazier damaged the company’s relationship with Reebok. Saul told SEW they never spread any rumors about Fab-Knit and had not done one thing to impact Reebok Team Uniforms.

In other news related to the Fab-Knit case, the U.S. Trustee appointed to the case said he was unable to form a creditors’ committee because there was “no interest” in such an action at the UCC meeting scheduled for March 9, 2005.


>>> Sounds like a tit-for-tat, but if a company has to get a rep to invest to keep it afloat you have to wonder over the quality of the business…