Frank Parsons Inc., an office-supply company that moved to Hanover two years ago with plans of expansion, said Friday that it is seeking Chapter 11 bankruptcy protection.
Its filing with the U.S. Bankruptcy Court in Maryland reported debts in the range of $10 million to $50 million, including more than $6 million in claims it is disputing. The firm, which calls itself the largest employee-owned company in the country focusing on office supplies, business products and technology equipment, estimated the value of its assets in the same $10 million to $50 million range.
Frank Parsons issued a statement that it expects "no disruption in products, services, or support" and has $5 million in debtor-in-possession financing from Wells Fargo for its reorganization efforts.
"The lifting of our heavy debt load has re-energized our employee-owners and will help us emerge a much stronger and more successful business," CEO J. Michael Lane said in the statement.
In 2008, the company — then Frank Parsons Paper Co. Inc., with a focus that matched its name — announced that it would consolidate its Landover headquarters and two Maryland distribution facilities in the Anne Arundel County community of Hanover. It had 330 employees at the time, 200 in Maryland. And company officials were expecting to add 150 to 200 more jobs to keep up with demand they anticipated for business and digital services.
But difficulties in the paper industry have weighed on the company since then, said its bankruptcy attorney, Gary H. Leibowitz of Cole Schotz. "Businesses have switched to electronic forms of communication more than ink on paper," he said.
The company, which sold its fine-paper division last year, is refocusing to make its business-products division — selling a range of goods, including toner and office furniture — the "go-forward business," he added. The company now employs 81, all of them in Hanover, he said.
"We'll also explore possibilities of a sale, if it makes sense," Leibowitz said.
Frank Parsons said the National Envelope Corp. in Texas and Global Fibres Inc. in New Jersey are its largest unsecured creditors, with claims totaling $2 million and $1.7 million, respectively. The Hanover firm disputes both claims.
In December, MacBain Printing Co. of Abingdon sued in U.S. Bankruptcy Court in Maryland for the return of $185,000 it paid Frank Parsons a year ago, plus interest, because the payment was made shortly before MacBain declared bankruptcy. Earlier, Frank Parsons had put in a $244,000 claim in the MacBain bankruptcy case.