BURBANK, Calif.—Progressive Custom Wheel Inc. is going out of business.
The Riverside, Calif.-based company—which manufactured and marketed aluminum and chrome custom wheels and its own brand of performance tires—executed a "general assignment" for the benefit of creditors on June 14.
Attorney Joel Weinberg of the firm Biegenzahn and Weinberg in Woodland Hills, Calif., who is representing Progressive, said the general assignment provision of California law creates an "out of court liquidation device."
Progressive has assigned its assets to CMA Business Credit Services in Burbank, Calif., which will sell Progressive's assets and inventory to pay off creditors.
Progressive's obligations became too large, said Mr. Weinberg, but he declined to provide any more details about the company's financial status or reasons for its demise.
"The secondary wheel market is very difficult," he said, "and the margins are very thin."
The liquidation process could take up to a year, Mr. Weinberg added, because "it's a complicated process."
A few weeks before filing papers to liquidate the company, Progressive ended a three-year effort to sell its own Parnelli Jones-brand performance tires which were manufactured by Goodyear and named after the former Indianapolis 500 winner.
Progressive also had added a chrome plating line in 1996 and began reconditioning used wheels in 1997.
But, all these efforts to diversify and increase profits apparently have failed.
Progressive originally incorporated in California on Jan. 20, 1981, and has continued to operate from the same location in Riverside until now.
The company has ceased production, said Michael Joncich, an estates manager for CMA. CMA is in the process of selling Progressive's inventory, equipment and other assets, he said.
There were talks with two other wheel firms to purchase Progressive, said Mr. Joncich, but no deal could be reached.
"We're attempting to find a buyer," he said, acknowledging the liquidation will probably proceed on a piecemeal basis.
Progressive's offices and manufacturing plant occupied two buildings in Riverside, which it "partially owned," according to Mr. Weinberg.
Progressive once leased 57 warehouses across the U.S., but CMA has consolidated the remaining inventory in 10 warehouses and is selling it at a discount.
Even though the general assignment process is less costly than filing for bankruptcy through the courts, many of Progressive's creditors may not see any money at all.
Although final figures for the value of the firm's assets and the amount of its debt are not available yet, Mr. Joncich said debt held by secured creditors is likely to exceed money received from the liquidation of assets.
When Progressive launched the Parnelli Jones private label, it was the first time a major wheel company distributed its own private brand tire line. Industry veterans Bill Eaton and his wife, Bonnie, were handling marketing of the PJ-brand, which was sold through retailers and specialty shops throughout the country.
However, when Progressive recently decided to exit the tire business, the Eatons sought and received licensing rights from Parnelli Jones to continue to use his name. They have since taken over marketing the line through their Akron-based Dirt Gripz Inc.