After a series of acquisitions, the Kentwood manufacturing group files for bankruptcy Ch. 11

KENTWOOD — A Grand Rapids-area manufacturing group that has made major investments in the casino gaming machine industry has filed for bankruptcy after racking up more than $10 million in debt.

TG Manufacturing LLC on February 21 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Western District of Michigan. The company, headquartered at 4720 44th St. SE in Kentwood, includes West Michigan-based subsidiaries AIM Tool & Die, AIM Industries, Craft Steel and Dorr Industries. TG Manufacturing also owns Tupelo Tool & Die in Tupelo, Miss.

Rich Achtenberg

Affiliated companies TGM Coatings LLC and TG Turnkey LLC also filed for Chapter 11 bankruptcy on Feb. 21, while TG Integration LLC — hoping to retain financial solvency — filed March 27.

Owned by Richard Achtenberg with a total of 36 employees, the four companies are represented by a Grand Rapids-based bankruptcy and commercial litigation law firm. Keller & Almassian PLC. A bankruptcy judge this week approved a motion to jointly administer the cases.

TG Manufacturing is seeking to sell all entities as a going concern and has had discussions with multiple interested parties, according to an affidavit and affidavit from Chairman Kevin Kyle.

TG Manufacturing has closed while TGM Coatings, TG Turnkey and TG Integration remain operational, according to court documents.

Attempts to reach TG Manufacturing were unsuccessful, and Keller & Almassian partner Todd Almassian declined to comment for this story.

Major Pivot

TG Manufacturing specializes in the manufacture of material handling and automotive components. Court documents revealed that at its peak, the company generated up to $20 million in annual revenue.

According to Kyle’s affidavit filed with the court, the company lost a contract with a “major customer” in 2020, resulting in a sharp drop in sales. As the COVID-19 pandemic swept through the United States in March 2020, the automotive industry was particularly hard hit, as vehicle production and its underlying supply chain experienced widespread disruptions.

TG Manufacturing then moved into a growing segment of its business with the production of casino and entertainment gaming machines, according to the affidavit.

To position itself in the market, TG Manufacturing in June 2020 acquired the gaming machine integration division of Grand Rapids-based Turnkey Fabrication LLC, which operated a 20,000 square foot facility in Grand Rapids and supplied businesses around the gaming industry in North America, such as MiBiz Previously reported. This division was later organized under the TG Integration banner.

“Gaming machine production is an exciting industry with huge potential for growth globally and we are delighted to offer some of the most vertically integrated products in the industry,” Achtenberg said during the announcement. of the agreement last summer.

The company began its vertical integration strategy in the casino gaming industry the previous year when it acquired Grand Rapids-based A2Z Powder Coating, which served as a supplier to the automotive, material handling and games. The three affiliated entities – TGM Coatings, TG Turnkey and TG Integration – worked together to vertically integrate the gaming machine production process.

Similar to the dynamics that have unfolded in the automotive industry, the COVID-19 pandemic has also shaken the casino industry, with physical casinos temporarily closed under public health measures.

Prior to the downturn, TG Manufacturing, TGM Coatings and TG Turnkey sought to shore up their finances and approached Bank of America in 2019 for a $5 million line of credit and $2 million term loan, according to court documents. This financing was secured by the assets of the three entities and also personally guaranteed by Achtenberg.

The entities failed to repay the loan, and in January of this year Bank of America filed a lawsuit in state court seeking a court-appointed receiver. The three companies owe Bank of America about $6.2 million at the time of filing, according to court documents.

The debt is rising

To compound its financial difficulties, TG Manufacturing was also named in several civil lawsuits in Kent County Circuit Court over unpaid invoices which led to significant judgments against the company. Over the past year, the company has faced nearly a dozen civil complaints in circuit court.

TG Manufacturing has seen several judgments in favor of the company’s suppliers, including $1.5 million for Benteler Automotive Corp., $561,029 for Chicago-based steelmaker Lafayette Steel and Aluminum and $96,563 for the industrial supply company GBA Supply Inc. based in Birmingham, Alabama. All are listed as unsecured receivables in TG Manufacturing’s file.

Below is an overview of the financial situation of each entity:

TG manufacturing

  • Assets: $1.6 million
  • Liabilities: $10.2 million ($6.2 million secured; $4 million unsecured)
  • Secured Creditors: Bank of America ($6.2 million)
  • Highest unsecured claims (local creditors): Grand Rapids-based Spectrum E-Coat ($49,944.13); Township of Grand Haven ($47,294.30); Greenville-based FabX Industries ($46,505.92); Grand Rapids-based United Fastener and Supply Co. ($36,770.72)

TG turnkey

  • Assets: $999,057
  • Liabilities: $7,863,501.89 ($6.2 million secured; $1.6 million unsecured)
  • Secured creditors: Bank of America ($6.2 million); Michigan Department of Treasury ($15,214.81)
  • Highest unsecured claims (local creditors): Greenville-based LaserTec Sheet Metal Fab ($96,433.87); Grand Rapids-based Machine Star ($32,098.14) and Advance Plating and Finishing ($27,756.50); Wyoming-Based Purity Cylinder Gas ($28,181.12)

TGM Coatings

  • Assets: $249,439.00
  • Liabilities: $6.2 million ($6.2 million secured; $33,268.01 unsecured)
  • Secured Creditors: Bank of America ($6.2 million)
  • Highest unsecured claims (local creditors): Grand Rapids-based J&L Roofing ($800); Arrowaste based on Jenison ($769.03); Purity Bottle Gas ($667.82)

GT integration

  • Assets: $538,067.00
  • Liabilities: $123,290.80 (all unsecured)
  • Highest unsecured claims (local creditors): Arrowaste ($2,207.25); Advanced Plating and Finishing ($1,588.54)

While TG Integration initially sought to avoid a Chapter 11 filing, “based on developments since the first cases were filed, it has become apparent that Integration should also file a Chapter 11 proceeding”, which occurred on March 27, according to Kyle’s affidavit.

The affidavit also stated that the three still-open entities had “an immediate need to use cash collateral” to continue their business operations. If this right is not granted to them, the affidavit claims that the company would suffer “irreparable harm” which could tarnish its operating value.

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