Med Covers files for bankruptcy
Triangle Business Journal - by Kim Nilsen
RALEIGH A Raleigh-based manufacturer of protective gear to shield medical equipment from bumps and jostling has sought financial cover as it works to retool.
Med Covers filed Chapter 11 bankruptcy late last month after nearly 20 years of making cases, covers and belts. The company's restructuring plan calls for scrapping unprofitable product lines.
The plan also says that manufacturing, which for years has been accomplished at facilities in Raleigh and in Kenly will be consolidated under one roof in Kenly. Med Covers will keep its corporate office and its sales and design operations on Raleigh's Transport Drive.
"It's a very aggressive plan," says Chief Executive Officer David Sutherland. "We're going to turn this thing around." Even before the Chapter 11 filing, company officials had taken steps to shed troubled product lines and reduce overhead.
Med Covers has $844,900 in secured debt and assets of $900,930, according to court documents. The company had $50,900 cash in the bank late last month and was expecting $57,500 in receipts.
Med Covers founder Gary Tomlinson has the largest claim on a list of the troubled company's top 20 creditors. Tomlinson left Med Covers in 1999 to start a new venture.
While production continues, the reorganization is likely to mean some job cuts, says Jim Jordan, a lawyer for Med Covers. The business employs about 45 people. "They had a number of product lines that were low margin and high cost," Jordan says. "They had a couple of other expansion ventures that, because of economic conditions and other factors, did not work out too well."
Med Covers was hatched in 1982 when Tomlinson noticed that wheelchairs, beds and other medical equipment were often dinged or roughed up in transit. With Jack Van Schoor, he incorporated Med Covers in 1984. Dave Wolf joined the company in the mid-1980s as CEO and put money into the manufacturing operation. Tomlinson says Med Covers was profitable by 1985.
Rapid growth twice landed the business among the Triangle's Fast 50, a ranking published by The Business Journal of the area's fastest-growing concerns. In the early 1990s, the company's combined dollar and percentage growth rate was 74.5 percent. Sutherland became CEO during that time.
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