Wilcox Press tries to stay afloat after bankruptcy

ITHACA - Wilcox Press, one of the largest commercialprinting companies in the Central New York region, found itself running out of cash sometime in late October.

It was a doom that had been approaching for years, thanks to a combination of moneysapping factors, according to federal court records.

A week after the bankruptcy filing, Judge Stephen Gerling dismissed the case based on opposition from creditors and some of the company's directors. The current status of the firm is uncertain.

Numerous people involved either declined to comment on recent events there or did not return calls.

Records connected to the bankruptcy filing, however, provide a window into the saga of the troubled company and paint a picture of a contentious chapter in its history.

Losing money

Wilcox Press watched revenue and profit fall for years. In April, the company retained Cedar Croft Recovery at $100,000 a month to cut costs and grow revenue.

One of the firm's shareholders ultimately filed for Chapter 11 bankruptcy protection on the company's behalf in November, according to court records. By then, Wilcox Press had been defaulting on its credit line with Wells Fargo Bank for more than a year.

"The company's financial situation has been deteriorating for several years, due in large measure to significant declines in customer orders, inability to properly account for and control costs, failure to adequately forecast expense items, and poor controls generally," several attorneys for the company's creditors wrote in a motion opposing the bankruptcy filing.

None of those attorneys returned calls seeking comment.

Wells Fargo is the firm's largest creditor. It held more than $6.8 million of Wilcox Press' debt. The company also owed at least $7 million to a group of unsecured trade creditors and $4.6 million to The CIT Group, an equipment lessor, court records state.

Wilcox Press generated $40 million in sales in 2004 and employed 225, according to the 2006 Book of Lists, published by The Central New York Business Journal. According to a report in The Ithaca Journal, the firm employed 165 in October, before laying off 53 of those workers temporarily.

Court records make it clear the company was essentially out of money and in danger of having its credit line cut off by Wells Fargo.

Purchase offers

Wilcox Press' four-member board of directors held a meeting Oct. 30 to consider the situation. The board included William Wilcox, an 80-percent shareholder in the company, Robert Witty, president and CEO of CFCU Community Credit Union, Richard Farr, and Barbara Thuesen, Wilcox's sister and owner of the remaining 20 percent of the company.

Thuesen did not return calls seeking comment. Witty declined through a representative to comment, Farr could not be reached, and an attorney for Wilcox did not return calls.

The board had been seeking possible buyers for the company for some time, according to court records. The directors learned of one at their Oct. 30 meeting.

Thomas Parziale, who was CEO of Wilcox Press for 17 years until 1997, had orally indicated an interest in buying the company, but was not ready to make a formal offer at the time of the Oct. 30 meeting. Parziale and another investor, Steve Rossi, currently operate a printing company that they acquired in a Chapter 11 estate acquisition.

Wilcox also told his fellow directors he was separately negotiating with a group including Jason Fane, a major landowner in Ithaca.

The board decided it couldn't wait for either offer and agreed to shutter the business the following day. All three board members, except Wilcox, resigned Oct. 31, according to written statements filed with the bankruptcy court by Farr, Witty, and Thuesen.

About an hour before the resignations were to be effective, however, the board met again and rescinded them, court records state. The directors held the meeting to consider a last-minute offer from Parziale and his investment group.

The group agreed to continue funding operations at Wilcox Press while completing the purchase, according to court documents. As part of a letter of intent, an entity, related to the Parziale group entered into a loan agreement, security agreement, and revolving-credit note in the initial amount of $350,000.

A committee of unsecured creditors agreed to a settlement with Parziale's group that could yield more than $2 million over time.

It was at the Oct. 31 meeting that indications of a rift between Wilcox and the other three directors first appear in court records. Farr, Witty, and Thuesen decided to extend business for another day to consider the Parziale offer.

Wells Fargo agreed to the extension as well. Wilcox voted against the decision, according to records.

The following day, Nov. 1, the board met again to further discuss the Parziale offer. During the meeting, the board received a second offer, this time from Fane.

That offer, however, was $800,000 to $1 million less than the Parziale option, court documents state. Farr, Witty, and Thuesen voted to accept the Parziale offer, while Wilcox voted against it.

Fane could not be reached for comment.

"In the board's judgment, the acceptance of the [Parziale] offer was the only way to ensure the possibility of keeping [Wilcox Press] as an operating entity and to preserve the more than 100 jobs in the Ithaca community," Farr, Thuesen, and Witty wrote in their statements. "An absolute essential element of the [Parziale] offer was the [group's] agreement to provide working-capital financing until closing, as Wells Fargo had terminated credit facility."

Parziale did not return calls seeking comment.

Wilcox's moves

Wilcox, however, wrote in a statement filed with the court that his authorization for the Parziale deal was never even sought, despite his status as majority shareholder. He also maintained the other three board members "refused" to consider the offer by Fane, which he presented.

Wilcox also wrote that he never accepted the move by Farr, Thuesen, and Witty to rescind their resignations after submitting them Oct. 31. Later, when Wilcox visited Wilcox Press' headquarters, he found a less-than-warm welcome.

"On Nov. 3, I visited the business premises and demanded access to the corporate minute book," he wrote in his statement. "...I was told that they would 'consider' the demand if it was made in writing, on five days notice.

"...When I again visited the business premises, accompanied by two local sheriffs, I was advised that I was unwelcome. Further, the locks to the business premises had been changed, thus excluding me from a company of which I am [an] 80percent shareholder."

About two weeks after the board accepted the Parziale offer, Wilcox voted himself as sole director and president of the company, according to his statement. it was then that he authorized himself to file for Chapter 11 bankruptcy protection, which he did Nov. 15 in U.S. Bankruptcy Court in Syracuse.

According to his statement, he filed so a trustee could supervise the sale of the business to Parziale's group, Fane's group, or any other interested bidders. Michael Pinnisi of Pinnisi & Anderson, LLP, who handled the bankruptcy filing, declined to comment.

The filing did not include a list of Wilcox Press' creditors because Wilcox could not gain access to the building to review records, according to his statement.

Swift response

The reaction to Wilcox's bankruptcy filing was swift. In their motion opposing the filing, attorneys for the company's creditors described it as a "last-ditch effort by an out-ofmoney shareholder ... to disrupt duly authorized corporate actions by the company and its board of directors..."

The creditors' attorneys also wrote that his self-appointment as sole director of the company included -questionable corporate actions" and violated the firm's charter. They also called his actions a "last-ditch ego play ... to try to sustain his family's legacy..." and wrote that Wilcox actually owed the company hundreds of thousands of dollars.

The filing seriously threatened the immediate future of Wilcox Press, which had been at least temporarily secured with the agreement by the Parziale group to finance the company, according to court records. The group and the bank both told directors they would not provide funding to the company while it was under bankruptcy protection.

"It is unclear what Mr. Wilcox believes is the benefit to the Chapter 11 filing," Farr, Witty, and Thuesen wrote in their statements. "There are no other offers for the [Wilcox Press] assets and the [Parziale group] has already extended substantial funding and resources to move the sale to closing.

"The [Parziale group] offer is the only viable alternative available to allow for the continued operation of [the company] and preservation of jobs. There is simply no other option."

They also wrote that the board considered a Chapter 11 filing, but rejected it because the company did not have enough cash to continue operating.

Parziale and his group also filed documents opposing the bankruptcy. An attorney for the group, Robert Weiler of Green & Seifter Attorneys, PLLC, declined to comment on the case.

The offer from Parziale and his investors was not included in court records.

Exactly what happened to the company after a judge dismissed the bankruptcy case Nov. 22 is not clear. Pinnisi says the firm simply reverted back to its status prior to the filing.

Whether that means the Parziale group was able to complete the purchase or is still pursuing a closing is unknown.