Armstrong Flooring Retirees Could See Loss of Health and Life Insurance Benefits | Local company

Life and health insurance benefits for Armstrong Flooring Inc. retirees remain at risk as the company progresses through the Chapter 11 bankruptcy sale process.

On Friday, an attorney for Armstrong Flooring Inc. said in Delaware bankruptcy court that interested buyers of the company were unwilling to assume payment for retiree health and life insurance benefits.

Ron Meisler, of Skadden, Arps, Slate, Meagher & Flom LLP, said the “practical reality to date” is that all bidders Armstrong Flooring has been in contact with have said they don’t want to take on the debt retirements. advantages.

East Lampeter Township-based Armstrong Flooring said it wanted to eliminate payments under health and life insurance plan obligations. The current expenses required under the retiree plans – nearly $245,000 per month – are prohibitively expensive given the company’s lack of cash and the constraints imposed by the budget in the context of its financing, argued Armstrong Flooring.

There are approximately 1,660 retirees who receive health insurance benefits and approximately 2,000 who receive life insurance benefits. Meisler said health benefits amounted to about $15 million of obligation and life insurance amounted to $40 million of obligation. In addition, he said, there are between $2 million and $3 million in annual administration expenses.

At Armstrong Flooring’s request, the court allowed the US trustee to appoint a retiree committee to negotiate with the company. The committee would only include non-union retirees. The United Steelworkers union and the International Association of Machinists and Aerospace Workers are representing their retirees in this case.

Meisler said Armstrong Flooring doesn’t close the door on the possibility that a bidder wants to take on the debt. The deadline for bids is June 14 with an auction, if needed, set for June 16. If the successful buyer does not assume the debt, Armstrong Flooring would likely return to court to remove or reduce the obligation, Meisler said.

Armstrong Flooring at 1770 Hempstead Road in East Lampeter Township on Thursday, April 7, 2022.

Other issues discussed in the debtor in possession financing hearing on Friday included payments to critical sellers and lease payments to High Properties. High Properties is the owner of Armstrong Flooring’s head office at 1770 Hempstead Road in the Township of East Lampeter.

Armstrong Flooring is in the process of paying the unpaid rent ahead of the May 8 bankruptcy filing. A company attorney said Armstrong Flooring issued a check for about $213,000 for June rent and made payments on the rent before the petition.

Given that Armstrong Flooring said it may need to extend funding until July 7, High Properties sought to ensure that rent for that period was also considered. High Properties wanted to ensure that these payments are within the debtor in possession’s budget.

Armstrong Flooring owes about $318 million, including $160 million in long-term debt, and has sought protection from lenders through bankruptcy. He has received court approval to sell his assets which he values ​​at $517 million.

Armstrong Flooring is seeking to sell its North American, Chinese and Australian assets as operating businesses, and bidders for each include operating buyers. A going concern means that the business would continue to operate. The company has acknowledged that there may be bidders looking to liquidate its assets.

Armstrong operates seven manufacturing plants in three countries. Two plants are in Pennsylvania, one in the city of Lancaster and one in Beech Creek Township, Clinton County. There are factories in Illinois, Mississippi, Oklahoma and a factory in China and Australia. The factories in China and Australia are not part of the bankruptcy but are part of the sale.

Last month, Armstrong informed all of its workers that they could be permanently laid off before the end of this month if the company did not find a buyer interested in keeping it on.

On June 9, the first meeting of the creditors’ committee will take place, which will be held without the presence of a judge and chaired by a representative of the US trustee’s office. The meeting can be as short as 15 minutes. The purpose of a creditors’ committee is to ensure that unsecured creditors, who may owe relatively small sums, are always represented in bankruptcy proceedings. The committee is appointed by the US trustee and usually consists of unsecured creditors who hold the seven largest unsecured claims against the debtor.

Armstrong flooring

This is Armstrong flooring pattern #5352 inside Armstrong’s Design Center on Hempstead Road on Wednesday 7th November 2021.