Why This Matters to Distributors: UPG Enterprises, whose businesses distribute and process structural, flat-rolled and specialty steel products, has filed for Chapter 11 bankruptcy protection and is seeking buyers for its U.S. operations. UPG says its businesses will continue operating during a sale process it expects to complete within 60 days.
UPG Enterprises LLC, an operator of steel distribution, processing, manufacturing and logistics businesses across North America, has filed for Chapter 11 bankruptcy protection as it seeks buyers for much of its U.S. operations.
The Oak Brook, Illinois-based company and 17 affiliates filed voluntary Chapter 11 petitions Sept. 22 in U.S. Bankruptcy Court for the Northern District of Illinois, according to court records.
UPG said it was marketing its assets to prospective buyers before entering Chapter 11 and has interest from multiple parties. The company said the bankruptcy process is intended to attract additional bidders and allow it to sell businesses as going concerns.
UPG operates a portfolio of companies involved in steel distribution, processing, manufacturing, and logistics at more than 20 locations across North America. Its businesses serve customers with structural steel, carbon, stainless and aluminum flat-rolled products and other processed and manufactured metal products.
The company’s portfolio includes Contractors Steel, a structural steel distributor and processor; Maksteel, a service center focused on slitting, blanking, and processing stainless, aluminum, and carbon steel; and Mapes & Sprowl Steel, which provides toll processing and specializes in tension leveling.
Other UPG businesses include Chicago Steel, a manufacturer and processor of welded steel tubing and tubular components; National Metalwares, a manufacturer of expanded and perforated metal products; Metalex; and Lamination Specialties, which processes electrical and specialty steels.
UPG said it plans to solicit competing bids under Section 363 of the U.S. Bankruptcy Code and intends to complete its sale processes within 60 days, subject to bankruptcy court approval.
“Today, we are announcing a series of steps intended to maximize value for UPG’s stakeholders through going-concern sales,” chief restructuring officer John Sordillo said in the company’s Sept. 23 announcement.
Sordillo said UPG expects to preserve its relationships with customers, employees, and business partners during the sale process.
UPG has arranged access to up to $6.1 million in debtor-in-possession financing from Firehorse Capital LLC, subject to court approval. The company’s operating subsidiaries also expect to use cash generated by their businesses to fund continuing operations, according to UPG.
The company has asked the bankruptcy court for authority to continue paying employee wages and benefits and meeting commitments to customers and vendors while the cases proceed.
Not all UPG is included in the bankruptcy. The company said its international operations remain outside the Chapter 11 proceedings. UPG Electrical and its subsidiaries also are not part of the court-supervised process.
Court records show the Chapter 11 cases include UPG Enterprises and affiliates such as Chicago Steel Holdings, Lexington Steel, Maksteel USA, Maksteel Transport, National Metalwares and UPG Flat Roll Group.
UPG said the decision to pursue sales through Chapter 11 followed a review of strategic alternatives and a marketing process conducted before the bankruptcy filing. The company has retained SC&H Capital as its investment banker, GlassRatner as financial adviser, Morris, Nichols, Arsht & Tunnell as bankruptcy counsel and Teneo as strategic communications adviser.
Any sales of the businesses through the Chapter 11 process will require bankruptcy court approval.
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