WeRecycle! Files for Chapter 11, Receives Proposal from Hugo Neu
Electronics recycling firm WeRecycle! Inc., based in Meriden, Conn., filed a petition to restructure under Chapter 11 of the U.S. Bankruptcy Code in February. The company also has received a proposal for investment from Hugo Neu Corp., headquartered in New York City.
Hugo Neu is a privately owned firm that manages, builds and invests in recycling, real estate, water transportation and cleantech businesses.
Subject to bankruptcy court approval, Hugo Neu’s plan would provide interim resources, if necessary, to help finance WeRecycle!’s reorganization. Under the terms of the proposal, Hugo Neu would acquire a controlling interest in WeRecycle! and would make further investments in technology and downstream recycling processes to ensure the company remains what it calls a leader in environmentally responsible recycling of electronics.
"We have grown tremendously over the past several years, but the unprecedented downturn in the economy and the subsequent credit crunch created liquidity problems and made it impossible for us to raise the capital needed to fund our continuing expansion," Mick Schum, president of WeRecycle!, says.
Gina Chiarella, WeRecycle! chief operating officer, says the company grew 30 percent in 2008, adding a new plant in Mount Vernon, N.Y.
However, WeRecycle! had difficulty obtaining loans in light of the credit crunch. "The downturn in the economy made it difficult to keep up with our growth," Chiarella says. "We were operating under strain for a while and just keeping ahead of it." She adds, "Chapter 11 was unavoidable."
Chiarella says she and Schum do not anticipate having to let employees go when the company’s bankruptcy petition is approved.
"We believe the planned investment by Hugo Neu Corp. will allow us to fulfill our vision of bringing the highest quality electronics recycling processes to the public and private sector," Schum says.
Chiarella adds that Hugo Neu Corp., which brings 60 years of recycling industry knowledge to the partnership, offers experience in operations as well as processes and technologies that can benefit WeRecycle! in addition to transforming the electronics recycling industry in general.
Hugo Neu and WeRecycle! began talking about a partnership in the fourth quarter of 2008, Chiarella says, after Hugo Neu heard about the company through a number of NGOs, who offered WeRecycle! as an example of a reputable electronics recycling operation.
Hugo Neu Corp. Chairman John L. Neu says, "We were looking for cutting-edge electronics recycling companies in which to invest and reached out to WeRecycle! because we believe they are the best."
Neu adds, "No company is immune to the current economic crisis, but I believe WeRecycle! is going to emerge a better and stronger business that will benefit customers, employees and their recycling partners."
According to Chiarella, WeRecycle! will likely emerge from bankruptcy protection after six month