Recycling company files for bankruptcy
CarbonLITE says no impact on production, employees
CarbonLITE Holdings LLC, a plastic bottle recycling company with a facility in Muhlenberg Township, announced Monday that it has filed for voluntary Chapter 11 bankruptcy.
Production at all CarbonLITE facilities will continue as normal and without interruption, as will payment of employees, according to a release. Layoffs are not under consideration, the release says.
“We’ve chosen to take this necessary step during a time of unprecedented challenge and expect to emerge from reorganization even more strongly positioned for the future,” CarbonLITE Recycling CEO Leon Farahnik said in a statement.
“Our customers, all of whom have steadily increased their commitments to the use of recycled plastic in their products, have expressed confidence in this process and our carefully considered decision,” he said.
Chapter 11 bankruptcy generally allows companies to submit a plan for reorganization so it can reach an agreement on a plan to pay back its creditors while the business continues to operate.
Los Angeles-headquartered CarbonLITE pointed to pressures directly related to the coronavirus pandemic for its financial issues, pointing to slowdowns in production related to employee illness and the depressed price of new plastic.
COVID-19 also caused a ninemonth delay in the completion and opening of its Berks County location, adding to the strain.
The 270,000-square-foot Muhlenberg facility — hailed as the world’s largest standalone bottle-to-bottle recycling center — finally launched with limited production in October, with a grand opening planned for spring.
CarbonLITE noted it incurred heavy capital expenditures from its new plant in Berks and an expansion of its Texas property.
Official filings made in the U.S. Bankruptcy Court for the District of Delaware show CarbonLITE’s largest debts are with two of the clients it supplies: in excess of $27 million to Nestle Waters North America Inc., and more than $20 million to Niagara Bottling LLC.
Founded in 2012, CarbonLITE is the world’s largest recycler of plastic beverage bottles. The company converts used plastic bottles into brand new bottles, creating a sustainable “closed-loop system” that’s better for the environment, according to its website.
CarbonLITE supplies major beverage brands such as CocaCola, PepsiCo and Nestle.
Once the Muhlenberg facility is fully operational, CarbonLITE claims it will recycle over 7 billion bottles annually.