Eastmet Corp., a financially ailing Baltimore steel manufacturer, announced yesterday that two more of its subsidiaries have filed for bankruptcy, shortly after an Illinois court ordered the company to sell the units to a Chicago businessman.
The two companies are U.I.P. Engineered Products Corp., which produces a variety of metal products, and Harry Davies Molding Co., which makes molding equipment. Under Chapter 11 of the federal bankruptcy code, the companies can continue to operate while developing a plan of reorganization.
Both firms are part of Eastmet's Industrial Products Group, which it agreed in November to sell to Michael E. Heisley for $10 million. After the deal fell through, Heisley sued Eastmet, and a judge in Illinois issued an order this week for Eastmet to follow through on the agreement, according to Eastmet board member Richard E. Gray.
As a result of the bankruptcy filings, however, the two companies are immune to the judge's order, Eastmet said. The court's order also does not affect two other units in the Industrial Products Group, which had filed for bankruptcy when the parent company filed in January.
The one Eastmet unit not under bankruptcy protection is Zalk Josephs Fabricators Inc., which under the court's order must be sold to Heisley within 30 days. In a statement, however, Eastmet said it "believes there are meritorious grounds for appeal and intends to pursue those appeal rights."