Carbonlite reading pennsylvania
CarbonLite's Reading, Pennsylvania, facility opened last October with limited production.
Photo courtesy of CarbonLite

PET recycler files for bankruptcy protection

CarbonLite says pressures directly related to the coronavirus pandemic contributed to its decision to reorganize.

Polyethylene terephthalate (PET) bottle recycler CarbonLite Holdings LLC, headquartered in Los Angeles, says it has filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company cites pressures directly related to the coronavirus pandemic, including temporary production slowdowns caused by employee illness, the low price of virgin plastic relative to recycled PET (rPET) and the nine-month delay in the grand opening of the CarbonLite’s new Pennsylvania facility caused by travel restrictions that held up equipment commissioning by European manufacturers, as factors in its decision to reorganize.

The filing pertains to all three of CarbonLite's facilities, in California, Texas and Pennsylvania, as well as to its California subsidiary, PinnPack Packaging. Production at all these facilities will continue as usual without interruption, as will payments to all employees, the company says in a news release about the filing. Layoffs are not under consideration, nor will customers see supply disruptions during the reorganization period, CarbonLite adds.  

"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 says. "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." 

The company says it has incurred heavy capital expenditures for the recent expansion of its Dallas facility and construction of its 270,000-square-foot plant in Reading, Pennsylvania, which began limited production in October of last year. This plant is outfitted with advanced robotic systems and its grand opening is planned for this spring. 

CarbonLite says it plans include customer contract renegotiations to ensure the company’s solid financial footing. It supplies rPET to all major beverage companies in North America, including Coca-Cola, Nestle Waters North America, PepsiCo and other global beverage brands.

The company opened its first plant in Riverside, California in 2012, followed by plants in Dallas and Reading. When the Reading plant is fully operational, CarbonLite says it will recycle more than 7 billion plastic bottles annually.