COMPANY NEWS; Problems at Chipwich Unit Result in Chapter 11 Filing
Chipwich Inc., the New York maker of chocolate-chip-cookie ice cream sandwiches, filed for
bankruptcy protection late Friday as a result of reportedly illegal actions at its Peltz Food division.
bankruptcy protection late Friday as a result of reportedly illegal actions at its Peltz Food division.
Chipwich had said in early June that it defaulted on its bank loans after it was found that the
Peltz division, which distributes frozen and refrigerated foods, had overstated inventories for the
fourth quarter of 1991 and the first quarter of 1992.
Peltz division, which distributes frozen and refrigerated foods, had overstated inventories for the
fourth quarter of 1991 and the first quarter of 1992.
This is the second time the company, which began selling ice cream sandwiches from pushcarts
in Manhattan, has filed for Chapter 11. In 1984, Chipwich sought bankruptcy protection,
burdened with heavy debt. 'Possible Misfeasance'
in Manhattan, has filed for Chapter 11. In 1984, Chipwich sought bankruptcy protection,
burdened with heavy debt. 'Possible Misfeasance'
This time, "Chipwich's financial difficulties are related directly to the actions and possible
misfeasance of the prior management of its Peltz Food division, headed by Mr. Robert Peltz,"
Samuel Metzger, the company's president and chief operating officer, said in court documents.
misfeasance of the prior management of its Peltz Food division, headed by Mr. Robert Peltz,"
Samuel Metzger, the company's president and chief operating officer, said in court documents.
He said the inventory overstatements at Peltz might have caused Chipwich to understate its 1991
loss of $1.4 million on sales of $4.8 million.
loss of $1.4 million on sales of $4.8 million.
In addition, Mr. Metzger said, Mr. Peltz may have "engaged in other improprieties in the
management and operations of the Peltz Food division." Chipwich notified the Securities and
Exchange Commission and the United States Attorney's office in Manhattan of the problems at
Peltz.
management and operations of the Peltz Food division." Chipwich notified the Securities and
Exchange Commission and the United States Attorney's office in Manhattan of the problems at
Peltz.
Mr. Metzger was not available to comment yesterday.
Some of Chipwich's 20 largest unsecured creditors include Nestle, owed $190,457; Borden Inc.,
owed $110,410, and the Campbell Soup Company, owed $81,097. Resignation Sought
owed $110,410, and the Campbell Soup Company, owed $81,097. Resignation Sought
After discovering financial problems at Peltz Food, the board of directors asked Mr. Peltz
to resign as chairman and chief executive officer in late May.
to resign as chairman and chief executive officer in late May.
Mr. Peltz's resignation, coupled with the revelations about overstated inventories, caused the
company to default on its loans with First Fidelity Bank of New Jersey.
company to default on its loans with First Fidelity Bank of New Jersey.
On July 17, the United States Attorney seized all Peltz division records, computer files and
equipment. Unable to conduct business, Peltz Food began liquidating in mid-July.
equipment. Unable to conduct business, Peltz Food began liquidating in mid-July.
Chipwich had planned to sell Peltz, which it acquired in 1989, and buy two smaller food
companies.
companies.
Earlier this year, Chipwich's stock was delisted from over-the-counter trading.
No comments:
Post a Comment