Baldwins Industrial Services’ US subsidiaries Baldwins Industrial Services Inc. (trading as Phillips Crane & Rigging) and Baldwins Leasing LP filed proceedings under Chapter 11 of the US Bankruptcy Code on 26 August.
When Baldwins reported its preliminary results on 26 July it admitted that the performance of the US business had been unacceptable for some time.
The Chapter 11 proceedings have been filed to enable the US business to reorganise its balance sheet by shedding debt, or to find a buyer for the business under the protection of the Bankruptcy Court.
As previously disclosed in the group’s preliminary announcement and accounts for the year to 31 March 2002, the group has guaranteed certain US lease obligations amounting to £7,178,000 in respect of finance leases and annual commitments of £3,662,000 in respect of operating leases.
Richard Baldwin, chairman and chief executive of Baldwins, said in a company statement: ‘The board has come to a strategic decision about the future of Phillips. The protection offered by the Chapter 11 procedure gives us the opportunity to reorganise Phillips or to find a suitable purchaser. These actions do not change the fact that in the UK Baldwins remains a market leading business and the difficult decision to apply to put Phillips into Chapter 11 was taken to safe guard the group’s long term future and success. In terms of our UK operations it is business as usual.’
Baldwins bought Texas-based Phillips Crane & Rigging for $12.5m just three years ago and immediately set about upgrading its fleet with European all terrain cranes including a Liebherr LTM 11000D (1,000t,) two LTM 1500s (500t), two LTM 1300s (300t), six LTM1160s (160t), six LTM 1060s (60t), six LTM 1040s (40t). From Demag it got four AC 100s (100t) and four AC 25 city cranes.
When contacted by ConnectingCranes, Richard Baldwin was unwilling to discuss the demise of Phillips. ‘The main thing is that the business in the UK is still profitable,’ he said.
He would not say whether this marked the end of his ambitions in the USA, nor would he reveal what equipment Baldwins had brought back from Texas.
Baldwins reported in July that for the year to 31 March 2002 turnover sourced outside of the UK amounted to £22.1m (2001: £17.1m) and the operating loss (excluding exceptional items, profits on sale of fixed assets and interest) was £5.9m (2001: £0.9m profit).
The company said at that time: ‘The US business was affected by very difficult trading conditions during the year, where the market, whilst relatively buoyant in certain sectors, remained highly price competitive. This coupled with technical problems on some of the new cranes contributed towards a very poor result for the year. Much effort has been made during the last six months to downsize the US operation and to focus on its core activities as well as to bring the cost base under tighter control. We reduced our depot network to two main terminals – Houston and Dallas, and closed four ancillary locations. The performance of the US business remains unacceptable, and the long-term future of the business is under review.’