Window Enterprises Closes; Placed into "Receivership;" Jancor Companies Close as Well

Window Enterprises Inc., based in Carrollton, Texas, has closed and has been placed into a court-appointed receivership. The order appointing Matthew Donnell as receiver of the company was issued Tuesday by the 192nd District Court for Dallas County, Texas.

According to Investopedia.com, a receivership is a type of bankruptcy set up for the receiver to repay as many of the company's loans as possible.

Hilco Financial LLC, a Window Enterprises debtor, had filed a request for this action.

As receiver, Donnell will:

• Manage the company's assets;
• Receive its income;
• Invest any funds held as receiver in an interest-bearing account; pay all funds received to Hilco immediately "to satisfy the outstanding debts and obligations of the defendant;"
• Take any and all actions necessary to preserve and maximize the company's assets;
• Take any and all actions necessary to use, convert, process and market the company's assets;
• Perform any other acts in regard to Window Enterprises' assets as authorized by the court; and
• Work with Hilco to agree on a budget to fund expenses of the sale or other assets without the need for further court approval.

The order also states that "nothing herein shall interfere, prohibit or impede [Hilco] from exercising its rights against [the company's assets], including, but not limited to, proceeding with non-judicial foreclosure on the collateral." The receivership will continue until the court orders otherwise, according to the order, signed by Hon. Craig Smith.

In May, Window Enterprises issued a press release that the company was "recapitalizing the business for future growth."

"Several institutional investors, in addition to participation from senior management, recapitalized the company in April and are committed to the long-term growth prospects of the company," read the release. The investors, however, were not named.

Hilco Financial LLC is a company designed to provide senior secured bridge loans for mergers and acquisitions, acquisitions of distressed debt, and specialty financing, according to the company's website.

Representatives at Window Enterprises were unavailable for comment; the company's voicemail line goes to a box that is full, and the company's website, www.windowenterprises.com, has been taken offline and has been replaced by an announcement about the court-appointed receivership. Representatives at Hilco Financial had not responded to calls for comment at press time.

Kensington Windows and Survivor Technologies Close; Owned by Jancor

Window Enterprises wasn't the only company who announced closings recently. According to various news sources (see links below), Kensington Windows in Vandergrift, Pa., shut its plant on Monday, October 27, leaving 150 employees out of work. Survivor Technologies in Hillside, N.J., also ceased operations according to newspaper reports. Both were owned by Jancor Cos. Inc. out of Ohio.

Click on the links below for reports regarding Kensington:

• Vandergrift Window Co. Closes, Employees Shocked
• Kensington Windows Closes Doors

Click on the links below for reports regarding Survivor/Jancor:

• Not a 'Survivor': Major Township Business Closes
• Ohio-Based Jancor Closes 3 Mississippi Facilities; 400 Lose Jobs

The Industry Responds

Unfortunately many in the industry believe more bad news is to come.

Mark Toth, window sales manager for H.B. Fuller, couldn't speak specifically to any one closing, but says many of these recent announcements are the results of companies that overextended themselves during the housing boom.

"Many of [the plant closings] have been in the West and Southeast where you had this tremendous boom," he says. He also points to the timing of many of these as a concern for the industry at large.

"If you're seeing all these things happen in October, we haven't hit the slow times yet," Toth adds. "There are many companies that are in dire situations and if nothing changes and there's nothing leading me to believe that it will, they'll be next."

Another issue leading to many of these industry problems is pricing, Toth says.

"[There are also] some of the companies that supply the big box companies-for years these companies have reduced and reduced their margins, almost selling product so little above cost that they're just creating volume, with no cushion, and the Lowe's and Home Depots have gotten so used to it that as raw materials have increased these companies have put themselves between a rock and a hard place because they can't raise their prices and they can't keep absorbing the cost of raw materials," Toth says.

Toth predicts the industry's downswing will last until the economy recovers—at least.

"My prediction is you'll see continued contraction and consolidation in the industry until the market recovers," he says.

Michael Collins, vice president of the building products group at Jordan, Knauff & Company, an investment banking firm that specializes in the door and window industry, and a columnist for DWM magazine, also commented on the closings.

"It's always disappointing to see announcements of plant closings because it means that workers have lost their jobs and significant losses have been taken in a business venture. This is the type of activity that I've predicted, though, in my discussions of capitulation over the past months," he says.

"Capitulation is when you're afraid to read a paper or a newsletter about the industry because it's almost certain to contain more bad news. The bailout package and the drying up of lending has helped add some sharpness to the process of capitulation in this industry but, otherwise, things are progressing as they must in order for this market to turn around," Collins adds. "We have some visibility into the status of troubled companies prior to announcements hitting the press and there are definitely more troubled companies out there. Some of these were holding on to take advantage of a busy season that, this year, didn't really happen for them."

Collins also has some predictions for 2009.

"While it's likely that the New Year will find more companies being sold in hurried auctions, this is a process that is as vitally needed in this industry as are periods of growth," Collins says. "With excess capacity wrung out of the system, the companies that are able to survive the storm or be paired with larger entities should emerge from this period extremely well-positioned to take advantage of the eventual recovery."

He also has some words of wisdom.

"I would encourage companies that find themselves financially strained to try to evaluate their options and seek help sooner rather than later or they will be bargaining from a position of weakness," Collins says. "There are still numerous buyers out there seeking companies to acquire and there are non-bank sources of capital that can help a company survive a tough period like this. It's important not to wait until the eleventh hour, though."

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