Depression in the auto industry forced RPS Products Inc., a large Maryland distributor of car replacement parts, into bankruptcy yesterday.
RPS filed a petition in Baltimore under Chapter XI of federal bankruptcy law, which permits a corporation to attempt a voluntary plan of reorganizing debts with creditors. The company cited the poor economy and record interest rates as major factors.
President Joseph Martin said the "action was taken with great reluctance, as management believes that progress is being made under the previously announced consolidation and reorganization program."
Martin was referring to an agreement with major suppliers last Oct. 31, under which RPS closed 26 stores and moved the inventories of those outlets back to the suppliers as part of an overall program to remain viable.
Difficulties for RPS have been evident for at least two years. In the 12 months ended last June 30, the auto parts firm suffered a net loss of $4.2 million on sales of $32.2 million compared with a loss the previous year of $544,000 on sales of $37.5 million. Sales fell sharply to $4.6 million from $9.3 million in the three months ended last Sept. 30, while RPS suffered a loss of $512,000 compared with a year-earlier loss of $194,000.