Fayetteville-based die-casting company files for bankruptcy.

Fayetteville-based Pace Industries, a full-service aluminum, zinc and magnesium die casting company, has voluntarily filed for Chapter 11 bankruptcy protection in a move to reorganize its debt as it faces financial pressures brought on by the coronavirus pandemic.

The company has operations in Fayetteville and Harrison, as well as around the U.S. and Mexico. In Arkansas, over the past several months, Pace has reduced the numbers of workers at its corporate headquarters by about 120 to around 70. In March, the company idled its workforce at its Harrison division leaving 420 workers without jobs. Its B&C division, which is also based in Harrison, saw 36 workers laid off but it recently restarted production four days a week, according to a company spokesman.

The company and its U.S. subsidiaries filed for relief Sunday in the United States Bankruptcy Court of the District of Delaware. The filing does not cover Pace’s operations in Mexico.

In Chapter 11, a company works to restructure its debt through the court so it can emerge financially stronger. In initial documents, the company claimed assets valued at between $100 million and $500 million, and debts between $100 million and $500 million. The move was approved by Pace’s senior secured lenders, according to a company release.

“Over the past two years, we launched significant new programs for the automotive industry to further penetrate this important growth market and implemented a series of cost-saving initiatives to position our business for longterm success,” Scott Bull,

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Pace’s chief executive officer, said in a statement. “Unfortunately, we were not able to realize the full benefits of these new programs and initiatives before the coronavirus weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants in the United States.”

Professor Tim Tarvin of the University of Arkansas School of Law in Fayetteville, who teaches bankruptcy and nonprofit law, said while Chapter 11 can be used by individuals, it typically is used by large corporations. He noted in the case of Pace, the process can help a company which has multiple subsidiaries all closely linked, reorganize at the same time.

He said Chapter 11 helps companies get back on their

feet while keeping operations going, workers on the job, and allowing them to provide goods and services to their customers.

At the time of its filing, Pace employed about 730, with 252 salaried workers and nearly 480 hourly or part-time workers. Before the filing, the company shuttered five of its die casting plants in the U.S., including those in Arkansas, in the face of supply chain disruptions and stay-at-home orders brought on by the coronavirus pandemic. The move cut about 70% of Pace’s workforce in those locations, according to documents.

The company was founded in 1970 in Harrison and is one of the largest fully-integrated suppliers of aluminum, zinc, and magnesium die cast and finished products in North America. It operates seven die casting plants in the U.S. and

two in Mexico, as well as tool and die shops and painting and finishing shops, according to court filings.

Its 600,000 square foot Harrison division is a die casting and warehouse facility that makes products for the automotive, gas barbecue and lighting industries. The B&C division, also in Harrison, produces miniature and conventional zinc die castings for automotive, electronics, lighting, personal grooming, and lawn and garden industry customers.

In court documents, Pace’s chief financial officer Craig Potter said challenges establishing new automotive parts made at the Harrison and B&C divisions, resulted in delays and higher company costs but it is confident any remaining operational challenges will be sorted out. While those plants are affected by the coronavirus

pandemic, Pace said in the filing that it hopes to have them both fulling operational by the end of 2020 if not sooner.

The company sells products in several primary markets including automotive, powersports, lawn and garden, and appliances. In 2019 the company booked $560 million in revenue.

Pace’s initial filings include a plan that includes a $125 revolving credit agreement and a $50 million loan as debtor in possession financing so the company can continue to operate normally and meet its business commitments throughout the bankruptcy process. The company hopes to emerge from Chapter 11 bankruptcy protection by sometime in the second quarter of 2020.

The company also filed motions to allow it to pay employees, its bills and suppliers.