Despite a recent bankruptcy filing and restructuring, Krystal CEO and founder Ed Grech makes it clear he's staying in the game and will continue developing limousine vehicles and buses that have earned the reputation over three decades as safe, classy and high quality chauffeured vehicles.
BREA, Calif. — Krystal Infiniti, holding company for Krystal Enterprises Inc., filed for Chapter 11 bankruptcy last week.
In a statement below, Krystal CEO Ed Grech told the industry that the company plans to stay in business developing, building and selling vehicles while maintaining customer service for its many clients.
DowJones.com’s Bankruptcy News reported the following on Aug. 15:
Krystal “doesn't have the cash to purchase parts to continue manufacturing vehicles, but it does own 51 at various stages of completion. If it were to complete the production of those 51 and sell them, along with the real estate it owns, it would be able to pay secured creditors in full and provide a substantial distribution to unsecured creditors.
“So while the debtor does not know at this time whether an ultimate reorganization or going-concern sale of its business will be possible, there is no question whatsoever that the debtor's creditors and its estate are substantially better off from the debtor's continued business operations and completion and sale of the debtor's existing vehicles than they would be if the debtor ceased its operations and closed down at this time, which is the only other available option," Krystal said in court documents.
“The company's primary secured creditor is East West Bank, which is owed about $6.5 million. Comercia Bank has a secured loan valued at $1.4 million, and unsecured creditors are owed $2.9 million, according to court documents.”
In a related development, a Woodland Hills, Calif., auctions liquidation firm listed information and pictures of equipment and assets from the company’s Brea, Calif., headquarters scheduled for bids and sales in early October.
The bankruptcy filing confirmed recent off-the-record tips to LCT Magazine that Krystal was in financial trouble. However, as of Monday, Krystal continued to run its sales operation with plans to stay in business manufacturing limousine vehicles and buses.
Chapter 11 bankruptcy permits reorganization under the bankruptcy laws of the United States and is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities.
Krystal CEO Ed Grech, who founded the company in 1982 and grew it from a small Southern California body shop into a global seller of limousines and buses that peaked in the last decade at an estimated $150 million in annual revenues, called the latest step a restructuring in a statement issued to industry media on Monday:
“Krystal continues to be the worldwide leader in limousine, bus, van, and hearse manufacturing, a position we have maintained for almost three decades thanks to our loyal customers worldwide. As our economy and industry have contracted, we, too, have faced many of the same difficult decisions and have had to adjust to the harsh realities — and continue to do so. We recently reached a point where we are forced to restructure. In order to continue to provide the best products to the industry, and to ensure the long-term success of Krystal's valued employees, dealers, and suppliers, we will be streamlining our operations to meet the level of demand.
“There are two key factors that have played a role in this. First, we have focused heavily over the last three years on the global market with our van products for which there has been a huge demand, specifically in China. Second, we have spent significant resources in developing the Lincoln MKT stretch, including the hiring of hundreds of team members, the investment in vehicle chassis and components, and strengthening our inside sales and support infrastructure. Unfortunately, operators are still hurting and demand has been tepid. During the first quarter of 2012, these projects were halted due to the current economic climate both domestically as well as in Asia.
“We will not be idle during this time. Rest assured that Krystal is still committed to developing the most innovative and cutting-edge vehicles you can buy for luxury ground transportation, and the excellent customer service you expect from us will never waver. When you have needs for your fleet, we will still be here for you. We’re here for the long haul, as we’ve been for 29 years.
During this difficult time, we would like to thank all of our valued customers and partners who have made Krystal the industry’s most recognized brand. We will come through these times as a stronger organization and continue to lead through innovation, product diversity, testing, and maintaining the highest quality standards in the industry. Do not hesitate to contact me or any of our staff with any questions you may have. Thank you again for continuing to make Krystal the industry leader for all your vehicle needs.”
No further information on Grech’s future plans for the company was available Monday. LCT will update developments as warranted.
Related LCT article: 1/31/11: Krystal Emerges From Bankruptcy
Related LCT article: 11/23/10: Fresh Start: Krystal Koach Launches New Era
Related LCT article: 2/9/2011: Inside Scoop: Ed Grech Goes On The Record
Sources: Dow Jones, Krystal Infiniti, BSBK.com, Martin Romjue, LCT editor