Eight years ago, Poteet Funeral Homes partnered with Canadian-based Loewen Group Inc.
About a year ago, funeral home director Thomas Poteet said the arrangement was working out great. It made it easier to pay workers health benefits and concentrate on offering good service.
But Tuesday, The Loewen Group announced it had filed for Chapter 11 bankruptcy protection in Wilmington, Del. and for creditor protection under the Companies Creditors Arrangement Act in Toronto, Ontario.
The four local Poteet Funeral Homes are still open. Under the arrangement, Loewen owns 75 percent of Poteet Funeral Homes.
"It doesn't affect the homes at the local level," Mr. Poteet said.
He is optimistic that the company will reorganize and remain viable.
"There's really nothing to say," he added.
In a statement Tuesday, The Loewen Group announced that it will restructure its debt, implying that it focused too much on buying cemeteries while not putting enough energy into its core business of funeral homes.
The company did not announce that it will sell any of its funeral homes, nor did it say when it expected to come out of bankruptcy protection, company spokeswoman Anita Marie-Hill said. It may be as long as a year, she added.
Chapter 11, the most common form of bankruptcy, frees a company from the threat of creditors' lawsuits while it reorganizes its finances.
The debtor's reorganization plan must be accepted by a majority of its creditors. Unless a court rules otherwise, the debtor remains in control of the business and its assets.
In the past year, Loewen Group stock has lost more than 98 percent of its value, declining from a high of more than $28 a share to a low of 50 cents a share. The stock price closed at 53 cents a share when trading was halted Tuesday.
The Loewen Group's troubles, however, seemed to come to a head this week.
The same day the bankruptcy filings were announced, Thomas Taylor, a director and significant shareholder of the company, resigned. He had joined the board in 1998.
"I fully understand his decision to resign now that the company has filed for a reorganization which will ultimately change his holdings in the company," Loewen Group chairman John Lacey said in a prepared statement.
The day after the bankruptcy protection filings, a securities class action lawsuit was filed in U.S. District Court for Eastern Pennsylvania against the company on behalf of all purchasers of securities of Loewen Group from March 5, 1997, to Oct. 6, 1998.
The lawsuit alleges that the corporation and some of its officers and directors violated federal securities laws by misrepresenting or failing to disclose financial information.
The filings were made, the company said, to "implement a new strategic plan while concurrently reducing its debt structure to compete more effectively in the marketplace."
Based in Vancouver, British Columbia, The Loewen Group owns or operates more than 1,100 funeral homes and more than 400 cemeteries across the United Sates, Canada and the United Kingdom. The company employs about 13,000 and derives 90 percent of its profits from U.S. operations.
Less than a year ago, Mr. Poteet said he eventually wanted to turn over his 25 percent interest in Poteet Funeral Homes business to his son, Thomas Poteet Jr.
He still has that ambition, he said Thursday.
Frank Witsil can be reached at (706) 823-3352.
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