Canada PU foam firm files for protection after price fixing fine

10 February 2012 16:01  [Source: ICIS news]

TORONTO (ICIS)--One of Canada’s largest polyurethane (PU) foam producers has filed for creditor protection as it seeks to sell its business to pay debts and claims arising from price-fixing lawsuits against it, according to court documents on Friday.

In an affidavit before a court in Toronto, Valle Foam president Tony Vallecoccia said that Valle and two affiliates require protection from creditors because of a Canadian dollars (C$) 12.5m ($12.5m) fine for price fixing, lawsuits for price fixing against them in Canada and the US, and declining sales.

Last month, Valle Foam and affiliate Domfoam were fined C$12.5m by Canadian competition authorities after pleading guilty to price-fixing in PU foam over a period of 11 years – from January 1999 to March 2010.

In Canada, Valle Foam, Domfoam and another affiliate, A-Z Sponge & Foam Products, have been named as defendants in five class action lawsuits for price fixing, with plaintiffs seeking more than C$100m in damages. In the US, Valle is among a group of PU foam producers sued by buyers for price fixing.

Vallecoccia said that Valle and the affiliates continue to operate but have “down-sized” by closing one location and suspending the manufacturing of underlay products.

Valle, based in Brampton, west of Toronto, is currently paying suppliers on a cash-on-delivery basis. However, given that it does not have enough cash to pay accrued debts owing to suppliers, the company fears that suppliers may soon cut off all deliveries,  Vallecoccia said.

Bayer, Valle’s largest supplier of polyols, and other suppliers have already contacted Valle to inquire about the status of their outstanding accounts, he added.

Also, several customers have indicated that they may be seeking new suppliers for PU foam given Valle’s situation, Vallecoccia said.

Meanwhile, Valle and the affiliates have launched a court-supervised process to sell their assets to meet financial claims against them, he said. The most likely buyers would be Valle’s competitors in the PU foam industry, he added.

Valle Foam, Domfoam and A-Z are collectively one of the largest manufacturers and distributors of PU foam products in Canada, with facilities in Ontario, Quebec and British Columbia. They employ around 550 staff.

($1 = C$1)

Additional reporting by Al Greenwood in Houston

By: Stefan Baumgarten
+1 713 525 2653

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