By Robert P. Mader
Of Contractor’s staff
SPRINGFIELD, MO.— Heatway Radiant Floors and Snowmelting has filed for Chapter 11 bankruptcy protection and announced that it has signed a letter of intent for Watts Industries to take over the company.
Heatway filed for bankruptcy after the adverse ruling in its ongoing dispute with Goodyear Tire & Rubber Co. over Entran II rubber tubing (March, pg. 1).
Watts’ purchase offer must be approved by creditors and by Federal Bankruptcy Judge Arthur B. Federman.
“Watts intends to create a new subsidiary focused on the radiant heating and snow-melting market,” said Mike Fifer, president of Watts. “The new company will sell an expanded line of products and services, including Heatway’s Onix and EPEX product lines.”
Heatway President Mike Chiles and Vice President Dan Chiles will not receive money from the purchase by Watts. Any money that comes into Heatway will be divided up among creditors, including homeowners with warranty claims for Entran II.
Dan Chiles said anyone with a warranty claim should go to Heatway’s Web site, www.gme2.com, and register as a warranty claimant. Warranty claimants will be treated as creditors for the bankruptcy proceeding.
“It’s important that people who have claims go to the Web site and register,” he said. “All claims are subject to the bankruptcy court and its rules, but it’s clear that if you don’t make a claim, you lose your opportunity.”
Once the bankruptcy judge decides how all available assets will be distributed to creditors, including warranty claimants, Heatway will no longer be liable for any other claims. Watts will not assume any liability for old warranty claims.
Fifer said Watts wanted to buy Heatway for a number of years. It drafted its offer before Heatway went to trial against Goodyear.
“None of the funds would go to existing shareholders,” Fifer said. “It would go into the corporation to buy all the assets, but the court will take the funds and make them available to the various classes of creditors. It was a fair offer when we thought Heatway was going to win and we have not reduced our offer one penny, so it’s something we hope the court and creditors will look favorably on.”
Fifer said he could not reveal the amount of the offer but that it would become part of the public record in the bankruptcy proceeding.
Chiles said he’s been advised that, in terms of normal bankruptcies, Heatway’s will be brief and to the point. The only hang up, he said, will be if Goodyear objects to the reorganization plan. Heatway still owes Goodyear $2.5 million.
Fifer has asked both Chiles brothers, Heatway Vice President of Sales Russ Rose and all of Heatway’s top managers to stay on to manage the new company. Chiles anticipates that the company will operate as the Heatway Division of Watts Industries.