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Washex Files for Chapter 11 Bankruptcy Protection, Factory Auction Cancelled

[Editor's Note: This story was updated Jan. 25, 2010, 10:54 a.m. CT.]
NEW HAVEN, Conn. — Washex Inc., a longtime manufacturer of industrial laundry equipment that abruptly closed its Wichita Falls, Texas, factory in September, filed for Chapter 11 bankruptcy protection here on Friday.
The company’s filing in U.S. Bankruptcy Court, in effect, halted an auction scheduled to have begun that day at the Wichita Falls facility.
“That stops everything,” says Wichita County (Texas) Constable Mark Brewer, who seized the plant and its contents in early December in an effort to satisfy a local tax warrant against Washex exceeding $130,000.
In its voluntary bankruptcy petition, Washex listed debts totaling $9.2 million and estimated the number of creditors to be between 200 and 999.
The purpose of Chapter 11 bankruptcy is to rehabilitate a business as a going concern, according to the Associated Press. This action frees a company from the threat of creditors’ lawsuits while it reorganizes its finances. The debtor’s reorganization plan must be accepted by a majority of its creditors.
Washex closed its plant and laid off its remaining employees in late September after more than 60 years in business. The privately held company offered no explanation.
Listed third among its largest unsecured creditors is the Texas Workforce Commission (TWC), $262,455.77. That amount reflects unpaid wages allegedly owed to former Washex employees. The TWC filed an administrative lien against the company earlier this month.
Washex’s parent company, Lavatec Inc., Naugatuck, Conn., has been operating under Chapter 11 bankruptcy protection since July.
 

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