More consolidation hit the printing industry this week as Dexter, Mich.-based Thomson-Shore filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of Michigan Southern Division.
According to papers filed in the bankruptcy case, Thomson is seeking permission to remain an on going concern until it can complete a sale it said has been working on for months. The potential buyer is the CJK Group which has offered to put up debtor-in-possession financing which would "serve as a bridge to the sale of [Thomson's] assets" to CJK. CJK has offered to put up $8.2 million as a deposit to be the Stalking Horse Bidder in any Thomson asset sale. The purchase cannot be completed until Thomson emerges from Chapter 11, a process that is expected to take several months.
In a declaration made by Thomson president Peter Shima, Shima said Thomson's problems can be traced to a decision about 10 years ago to embark on a $10 million effort to retool Thomson, a move that added to the printer's debt. The upgrade failed to deliver the expected new business and as a result, profits declined. An effort to further diversify the company's business failed to counter the negative trends impacting the book manufacturing business, however.
Things worsened in November 2017 when a cyber attack resulted in six-figure losses and when Edwards Brothers Malloy went out of business in June 2018. Thomson was unable to capture enough new business to improve its profitability. From that point on things continued to deteriorate—Thomson couldn't raise enough capital to improve its liquidity crisis and in the fourth quarter of 2018 it hired a consultant to review its options. That review led to the hiring of a new CFO, a reduction in management pay, and some company layoffs. But the actions were not enough to stem the drain on Thomson's finances.
If the asset sale to CJK is approved, the Thomson plant is expected to continue to operate, but at reduced staffing levels. Thomson employs about 180 people, but according to the local publication On Main, a letter sent to the Dexter City Council said that with the anticipated sale of certain assets to CJK, "mass layoffs" are expected to take place. According to the article, about 80 current employees will not be offered new jobs.
If CJK's purchase goes through, it will mark another acquisition in long string of purchases the company has made of mid-sized printers. Recent acquisitions include Dickson Pres, Kingsport Book, and Webcrafters.
