Product Quest Manufacturing files bankruptcy to wind down operations

By Caroline Salls

Pittsburgh, Sept. 10 – Product Quest Manufacturing, LLC filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the Middle District of North Carolina.

The company said it is authorized to operate its business as a debtor in possession for the purpose of winding down operations.

Product Quest said the Chapter 11 filing was caused by financial distress created by product quality, regulatory compliance issues and product recalls affecting its Daytona, Fla., facility, which ceased operations as of July 30, as well as compliance issues under remediation at the Kannapolis, N.C., facility.

As problems with the Daytona facility were uncovered and became public, the company said the costs associated with the Kannapolis remediation efforts continued to increase, and the financial condition of the Kannapolis facility began to falter.

Product Quest said the Kannapolis facility lost multiple key customers in mid-August, and the company determined that it was not generating sufficient cash to sustain its ongoing business operations.

The company said it engaged in discussions with its senior secured lenders regarding potential additional financing to fund the operations at the Kannapolis facility while Product Quest sought a potential buyer for that facility, but given the deteriorating financial performance and the significant costs associated with maintaining the operation through a sale process, the lenders were unwilling to advance additional funds to the company.

As a result, Product Quest said its board decided that the best course for the company to maximize value for its stakeholders was to cease operations at the Kannapolis facility, in addition to the already closed Daytona facility, and file bankruptcy.

The company requested court approval to use cash collateral to provide for working capital requirements and other general purposes during the Chapter 11 case.

The cash collateral use is scheduled to expire on Sept. 28.

According to court documents, Product Quest has $100 million to $500 million in both assets and debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Northen Blue, LLP is representing Product Quest in its Chapter 11 proceedings.

Holly Hill, Fla.-based Product Quest manufactures primarily over-the-counter drugs and cosmetics, as well as some prescription drugs and animal health products. The Chapter 11 case number is 18-50946.

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