Armstrong Flooring Inc. moved closer to finalizing a loan Friday that would keep the business afloat as it reorganizes and continues to sell its assets.
Lawyers for the company told a Delaware bankruptcy judge in a hearing on Friday that they were closer to obtaining what is called debtor-in-possession financing. The judge continued the hearing until Monday afternoon. The negotiations were described by the lawyers as collaborative and favorable to the objectives of the company.
Debtor-in-possession financing must be approved by the judge for Armstrong Flooring to proceed with the reorganization and bankruptcy sale. The funding would give the company, which has about 420 workers in Lancaster County, the cash it needs to keep operating while it reorganizes and also tries to find a buyer.
Lenders Bank of America NA and Boston-based Pathlight Capital had challenged the $30 million loan offered by JMB Capital Partners Lending LLC, of California. The challenge is to know which lender would be the first to be repaid if the company were to collapse and face liquidation.
East Lampeter Township-based Armstrong Flooring doesn’t have enough money to continue, so it wants to avoid lengthy legal wrangling and finalize debtor-in-possession financing. It filed for bankruptcy on May 9, the day after exceeding a deadline imposed by its lenders to find a buyer.
Armstrong Flooring has total debt of $317.8 million and long-term secured debt of $160.5 million.
For 160 years, the company has been a leading global producer of resilient flooring products used primarily in the construction and renovation of commercial, residential and institutional buildings. Spun off from Armstrong World Industries in 2016, Armstrong Flooring designs, manufactures, sources and sells flooring products primarily in North America and the Pacific Rim.
Armstrong employs about 420 people between the factory and corporate offices in Lancaster County, down about 80 people since December 2020.
The company has lost at least 100 employees in key departments since March 1, according to its bankruptcy filing. He asked the court to remove the addresses of employees to prevent poaching of workers, which would compromise his ability to operate.
The company employs 1,212 people in the United States, four in Canada and 495 in non-debtor subsidiaries in China and Australia.
About 277 manufacturing workers in Mississippi and Lancaster are represented by various unions, including the United Steelworkers and the International Association of Machinists and Aerospace Workers. Armstrong Flooring also employs 265 full-time and part-time independent contractors and approximately 18 temporary employees.
Union representatives could not be reached for comment on Friday.