Cummings Inc. (Nashville, TN) has been acquired by Prophet Equity LP (Southlake, TX) through Cummings Resources LLC, an affiliate.
Jim Murray, the former company’s VP of sales and marketing, said the shift, though already legally formalized, “is happening as we speak.” He could not make any definitive statements about payments for unsecured creditors, but says the company spent the past week contacting them.
“I’m not sure there’s hope, but we’re trying to be a responsible vendor going forward,” he said. “It [the sale] wasn’t the outcome we were striving for as we looked to raise equity and capital in our business.”
The newly formed CITISS Inc. did not purchase Cummings’ liabilities and is not legally obligated to repay creditors, though the company hopes to repair relationships with vendors. “We intend to be a good vendor to our customer,” Murray said.
“After months of searching for a solution to solve Cummings Incorporated’s debt and working capital challenges, Prophet Equity provided the best recovery to the senior secured lender, while also providing the liquidity for the new business to grow,” explained Steve Kerr, former President and CEO of Cummings Inc., in a press release.
The Nashville Business Journal reported today that the loss of major clients, such as General Motors and Saturn, was a factor in financial difficulties that led to the foreclosure, according to Murray.
The former owners of Cummings Inc., including Kerr, will be involved with the new company’s management as employees. The company will maintain its headquarters in Nashville and manufacturing facilities in Dothan, AL and Riverside, CA.
The identity of the primary lender who seized the company’s assets and sold them at a discount is still unknown. Calls to the company’s legal counsel regarding this matter were not immediately returned.