Echelon Furniture in Gas City files bankruptcy

Munire filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, which Lois R. Lupica, resident scholar at the American Bankruptcy Institute, said allows the company to reorganize or to liquidate.

Echelon filed for bankruptcy under Chapter 7, however, which gives the company one option.

“Only one thing is intended by a Chapter 7, a pure liquidation,” said Lupica, a University of Maine School of Law professor. “Essentially, what the company is doing is selling off assets of value and then dissolving.”

Sept. 19 was also the last day Echelon’s factory at 100 Munire Drive was in operation. Gas City Mayor Larry Leach said he heard the news from company president Munir Hussain that afternoon, by which time only two cars were left in the parking lot of the nearly 200,000-square-feet facility.

Gas City is among the creditors listed in Echelon’s bankruptcy filing. The company has an outstanding loan for about $1 million from the city itself as well as an outstanding loan for $1 million from the Gas City Redevelopment Commission,

according to the court document.

Another local creditor listed in the filing is STAR Financial Bank, from which Echelon has an outstanding loan of about $711,000.

The city and bank each have a lien on Echelon’s property, according to the filing. CC Funding, a New York company owed about $1.2 million, and Sterling MFC Capital LLC, a New Jersey company owed about $797,000, each have liens as well.

Leach could not be reached for comment Monday afternoon, but Grant County Prosecutor Jim Luttrull Jr. said he, chief investigator David Homer and other officials have discussed reports from Echelon employees who say they’ve been unable to cash their last paychecks.

Echelon’s bankruptcy filing lists about 135 individuals, most with Grant County addresses, who have a “potential wage claim” against the company.

The bankruptcy document cites a balance of about $4,800 in its “STAR Bank payroll account” and about $1,400 in its “STAR Bank operating account.

Echelon’s filing also indicates that a female individual has filed a “charge” against the company through the U.S. Equal Employment Opportunity Commission, which enforces federal laws that prohibit discrimination in the workplace based on factors like race, religion, nationality, gender and age.

Hussain is president of both furniture manufacturers, which share the same Piscataway, N.J., mailing address, according to the bankruptcy filings. The documents state Hussain is a partner with 80 percent ownership. The other two partners listed in the court documents are a “Michael Gormohey Delaware Trust” or “Michael Gormeley Delaware Trust” of New Jersey, with 15 percent ownership, and a Kurt Olender of New Jersey, with 5 percent ownership.