|6 Months Ended|
Jun. 30, 2018
NOTE 12—SUBSEQUENT EVENT
On July 11, 2018, Koontz-Wagner, a wholly owned subsidiary of the Company, filed a voluntary petition for relief under Chapter 7 of Title 11 of the Code with the U.S. Bankruptcy Court for the Southern District of Texas. The filing was for Koontz-Wagner only, not for the Company as a whole, and is completely separate and distinct from the Williams business and operations. Prior to the filing, the Company obtained a waiver of the event of default under the Centre Lane Facility that the filing created. Please refer to “Note 8–Debt” for additional discussion on the Fifth Amendment to the Centre Lane Facility.
Because the Company’s Board of Directors approved the plan under which Koontz-Wagner would file for bankruptcy on July 9, 2018, the effects of the filing on the Company’s financial statements will be recorded in the third quarter of 2018. In addition to writing off its net investment in Koontz-Wagner, the Company will record liabilities to reflect the $4.0 million Centre Lane Facility Fifth Amendment fee, our third-party consultant’s preliminary estimate of the pension withdrawal liability of $4.3 million related to Koontz-Wagner’s International Brotherhood of Electrical Workers Local Union 1392 multi-employer pension plan, a $1.8 million negotiated settlement of the Company’s guarantee of Koontz-Wagner’s Houston facility lease agreement and a $2.4 million liability as a result of the Company providing affected Koontz-Wagner employees with 60 days of salary continuation as well as the difference between each employee’s current cost of health care and the cost of continued benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Payment of these wages and benefits is contingent upon the departing employee providing a general release of claims against the Company.
Based on our third-party consultant’s preliminary estimate, the Company currently expects to pay the pension withdrawal liability over a period of 20 years via estimated payments of approximately $0.3 million per year. The actual withdrawal liability will be calculated by the plan trustees through a process which we expect they will initiate during the third quarter of 2018, and we will true-up to the actual when it becomes known. The lease guarantee settlement and salary and benefit continuation liabilities will be paid in full by the end of 2018. Subsequent to the July 11, 2018 filing, the Company submitted the required schedules to the trustee on July 30, 2018. During the course of the bankruptcy proceedings, it is possible that additional liabilities may arise that must be satisfied by the Company.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/presentationRef