American LaFrance Answers Bankruptcy Questions

American LaFrance provides answers to questions concerning its recent decision to declare bankruptcy.


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Why did American LaFrance, LLC declare bankruptcy?

Answer: The Company is filing this petition in part due to circumstances which resulted from inventory not properly disclosed as obsolete when ALF acquired its business in December 2005.

A second material factor requiring ALF's Chapter 11 filing relates to operational disruptions caused by the installation of a new ERP system as ALF transitioned away from the computer system of ALF's previous owner.

As a result of the unanticipated obsolesce of inventory and the ongoing ERP problems; ALF has incurred approximately $100 million in secured debt since it purchased its business. These problems have resulted in slowed production, a large unfulfilled backlog, and a lack of sufficient funds to continue operating.

The voluntary filing of a Chapter 11 bankruptcy prevents the Company from being forced into an involuntary bankruptcy where the Company has no input to its future and cannot protect its customers, dealers and employees.

Is American LaFrance closing its doors and going away?

Answer: No. A bankruptcy is about a company reorganizing itself so it can correct its financial problems and be a stronger company in the future. Many well known companies have been through Chapter 11 and have emerged as stronger companies, for example, Kmart, Macy's, United Airlines and Delta Airlines.

How long will American LaFrance be in a bankrupt situation?

Answer: When a company's assets are less than its liabilities it is "bankrupt". The filing of the Chapter 11 Bankruptcy action begins the process of healing. We anticipate that American LaFrance will complete its reorganization in less than 90 days from January 28, 2008. At the end of those 90 days American LaFrance will emerge from bankruptcy with ample financial strength to continue long into the future.

My department has apparatus on order that is very late. What happens to our order?

Answer: For the past several months American LaFrance has focused on correcting our computer systems so that when we start receiving new materials from our suppliers we are ready to restart our plants. Along with the IT Systems efforts we are working to both complete the Charleston plant and streamline the operations to reduce our manufacturing time. While many orders are already quite late we will be able to give our customers an accurate updated delivery time that can be met.

We are currently updating our delivery schedule based on a March 10, 2008 manufacturing restart and will advise our dealers and sales representatives of the delivery dates. Contact your dealership for this new information.

Will the apparatus on order be rushed through production resulting in poor quality?

Answer: No. We are focused on waste and faster production cycle times and will not rush the trucks through production. Most of late deliveries are due to lack of parts and issues with our IT Systems. Quality is a concern and we will remain focused to make sure delivered apparatus meets our customer's quality expectations.

My department has already received apparatus from American LaFrance. What happens to my existing warranty?

Answer: Existing warranties will be honored.

My department has been waiting for months to get after-market parts to keep our apparatus in service. Will this problem be corrected?

Answer: The parts problems we have experienced due to our IT System issues have also affected our after-market parts operation. This will be corrected rapidly as production parts begin to flow into the Company. We are moving our Parts Distribution Center (PDC) into the main Summerville, SC plant immediately.

I understand American LaFrance has had a tremendous number of employee lay offs. Is this true?

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