Revere-based New England Confectionery Co. will continue to produce the wafers — as well as Sky Bar, Mary Jane, Sweethearts — and other candies at least for the rest of this month, and perhaps through November, depending on who takes over the wholesaler after a bankruptcy auction scheduled for May 23.
Whether the company, which traces its roots to 1847, will make it past 2018, however, is unclear.
Boston-based liquidator Gordon Brothers already has committed to continuing to operate the company through November if it has the winning bid at the auction. Beyond that, Necco’s future is uncertain — even more so if someone else ends up winning at auction. To qualify, the cash bids must be at least $13,961,900.18 and be filed by May 18.
Last month, former Necco chief executive Al Gulachenski said he’d like to buy the company by way of a crowdfunding campaign to raise $20 million that would at least keep part of Necco in business. At last check, the campaign had raised $4,320. Gulachenski did not return a call for comment about the auction, but he has called his effort “a tall order.”
Necco filed for Chapter 11 bankruptcy protection in April in response to a petition filed by three creditors trying to force the manufacturer into an involuntary bankruptcy, claiming they were owed more than $1.6 million.
In US Bankruptcy Court in Boston, Necco asked to be allowed to forgo a required auction process so it could complete a $13.3 million private sale of its assets to Gordon Brothers. The global firm, which specializes in acquiring distressed companies, is currently working on the closing and liquidation of Toys ‘R’ Us.
Michael McGee, the candy maker’s chief executive, in March notified state officials and Revere’s mayor that the company would lay off about 400 workers and executives if it couldn’t find a buyer by May. McGee did not return a call seeking comment.
In a court filing, McGee said that as of April 17, Necco had 232 full-time employees, mostly in its Revere headquarters. He said in the filing that the company had incurred “substantial” debt with liabilities exceeding $152 million.
Necco, which is owned by an affiliate of investment firm Ares Capital, argued in court papers that going through an auction would likely not yield a better offer than the one put forth by Gordon Brothers. It also said an auction could cause Gordon Brothers to walk away from the deal.
The court disagreed and last month authorized the appointment of Harry B. Murphy, of Boston firm Murphy & King, as Necco’s bankruptcy trustee. Murphy negotiated with Gordon Brothers to have it remain as the initial bidder and, if it is successful at the auction, operate the company through Nov. 30. Murphy also negotiated a lease extension up to Nov. 30 with Necco’s landlords, Atlantic Management Corp. and VMD Cos, to allow the company under new ownership to continue to remain in its American Legion Highway headquarters. The lease, originally scheduled to expire in August, is about $300,000 a month, he said.
“We’re hopeful there will be someone coming in buying it and keeping it in place,” Murphy said. “The company is producing product right now, workers are coming back to work, there will be some attrition, but we’re hopeful we can keep the workforce going at least until November if the Gordon Brothers’ bid wins.”
Murphy said he is investigating the company’s finances to determine by August how much creditors are owed, as part of the bankruptcy process.Katheleen Conti can be reached at email@example.com.