Hardwood Supply, one of the largest businesses in Burrton, has declared Chapter 11 bankruptcy, with declared debts of more than $6.7 million.
The business makes hardwood trim for the regional home construction industry and has struggled for several years with large debts.
There are four related corporate filings in the bankruptcy court in Wichita, for Hardwood Cabinets LLC, Hardwood Manufacturing LLC, Hardwood Millwork and Supply LLC and their holding company, WK Holdings.
Under Chapter 11 the companies can continue to operate under court oversight. A representative of the companies said the businesses are fundamentally sound, but that they were hobbled by large debts incurred from a cabinet-making operation and wholesale lumber yard, both of which they no longer own.
In January, it was announced that Hardwood had sold a 47,000-square-foot building and 18 acres of land to IMMI, an Indiana company that makes bus seats for Collins Industries in Hutchinson and other manufacturers.
Hardwood and the associated companies expect to get a new loan and emerge from bankruptcy in the next two months, the representative said.
The biggest creditors are three banks: Midland National of Newton, owed more than $3 million; First Bank of Newton, owed more than $1.3 million; and Kanza Bank of Kingman, for which the amount owed is not listed in the bankruptcy filings.
The city of Burrton and the Kansas Department of Commerce are also major creditors. In 2010, the state, via the city of Burrton, extended the company a $490,000 loan to keep it operating. According to the bankruptcy filing, the company still owes $477,000.