Sigg Switzerland AG plans to keep a physical presence in the U.S., even as it folds its U.S. subsidiary into its Canadian subsidiary as part of a Chapter 11 bankruptcy reorganization, according to court records obtained by The B.O.S.S. Report and confirmed in and an interview with Rob Dewar, president and general manager of Sigg North America.
As part of the plan, Sigg Switzerland USAs third-party logistics firm in New Jersey, the Sigg office in Stamford, CT, all nine U.S. employees and four independent rep agencies would continue operating, but report to Sigg Products Canada, Inc.
We are not pulling up roots in the United States and that’s important for people to know, said Dewar. If it goes as planned, there will still be a U.S. presence.
The reorganization plan calls for Sigg Products Canada Inc. to buy the assets of Sigg USA in a court-supervised transaction geared toward raising money to pay back a portion of the debt owed non-secured creditors, according to court documents.
When Sigg USA filed for Chapter 11 protection on May 20, it listed $13.01 million in liabilities and just $2.5 million in assets. But the bulk of that money, or $9.2 million, is owed to Sigg Switzerland AG. Another $2.1 million is owed to secured creditors, leaving about $1.7 million owed to unsecured creditors.
Sigg USAs bankruptcy traces its origins to 2008, when media reports heightened public concern over the health effects of bisphenol A, or BPA, a chemical widely used in the manufacture of food and beverage containers, including polycarbonate bottles sold by outdoor specialty and other retailers.
But under pressure from the media and consumer groups, Sigg conceded in August 2009 that liners in some of its bottles included trace elements of BPA. While the company exchanged more than 300,000 bottles for free, that did not prevent law firms from filing eight class action lawsuits alleging the company misrepresented its health safety claims and violated consumer protection laws.
Sigg Products Canada also exchanged thousands of bottles, but because it had only opened in 2009 and had far less exposure, it was better able to manage through the crisis, said Dewar.
Sigg USA now advertises that its bottles use BPA- and phthalate-free ingredients. It was vigorously fighting efforts to certify the pending lawsuits as a class action as of May 20.
In 2010 sales of the debtor declined further to approximately $10 million, the companys Chapter 11 petition reads. The debtor has lost millions of dollars in each of the past two years as a result of decreased sales and unsustainable cost structure. Essentially the parent has been supplying the debtor with product for which it has not been paid. The debtor is unable to satisfy its creditors from future profits.