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Turbulent Times for Star Trac
Recent troubles have forced US-based fitness equipment manufacturer Star Trac to enter into an Assignment for the Benefit of Creditors (ABC) in accordance with California law.
Having earlier said it would not file for bankruptcy, a company statement informed interested parties that all assets of Unisen Inc., the parent company of Star Trac, would be transferred to a new corporate entity, Core Industries Inc.
By entering into an ABC, Star Trac says it will develop a strategic plan to monetise the assets for the benefit of creditors and to improve Star Trac's balance sheet to create a healthy company going forward.
An ABC is a common law business liquidation mechanism that is an alternative to a formal Chapter 11 or Chapter 7 bankruptcy proceeding. The ABC proceeding is governed by US state law rather than US Federal bankruptcy law.
Star Trac endured a turbulent first half of 2010, laying off employees, consolidating its operations and enduring rumours that the company would file for bankruptcy. In May, Steve Nero resigned as president, replaced by Mike Leveque, and in July, Michael Bruno of Land America Health and Fitness Co. of Xiamen, China, purchased the company.
Since Bruno's purchase of Star Trac, the company says it has restructured operations to improve its products, distribution and customer experience. The company had also been in negotiations with vendors to restructure outstanding payables, but the company said this process made entering into an ABC unavoidable.
In an email, the company explained "to achieve th(e) high level of proficiency that our clients and vendors have come to expect, we have adapted our operational activities to reflect these goals.
"This process includes re-engineering products and business segments, re-establishing vendor relationships and stabilizing the supply chain. We are also currently conducting good-faith negotiations with vendors in order to restructure outstanding payables.
"This process is an integral step towards repositioning the organisation for long-term success â¦ our entire leadership team is committed to increasing our ability to provide the product innovation, quality reliability and customer service that have been the Star Trac brand legacy since 1988. We are determined to emerge as the global market leader in the commercial fitness industry."
Explaining the companyâs entry into ABC, Mike Leveque, President and Chief Operating Officer of Star Trac, said in a statement that "despite the infusion of capital from the investment by Michael Bruno, our company could not reduce its payables adequately through direct settlement negotiations with our vendors.
"We take this process as an integral step towards repositioning the organization for long-term success. Our entire leadership team is committed to increasing our ability to provide the product innovation, quality, reliability and customer service that have been the Star Trac brand legacy since 1988. We are determined to emerge as a stable company that will be better positioned to take care of our customers."
In a further statement Star Trac said that all purchase orders that have been placed with Star Trac will transfer to the new company and will be honored at the terms of the original order, adding that all warranties for product in the field will also be honored by the new company.
As of 2019, Star Trac products in Australia and New Zealand are distributed by NovoFit.
21st April 2008 - Star Trac enhances the Workout Experience with Nike + iPod
31st January 2008 - Star Tracing across the Globe
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