Terrill Manufacturing Company Files Bankruptcy, Strives to Stay in San Angelo

SAN ANGELO, TX - Terrill Manufacturing Co. Incorporated officially filed for Chapter 11 bankruptcy as of Tuesday, September 20; however, President Gary Rushin said staff are determined to stay where they belong.   

On Friday, Rushin spoke with LIVE! about the events leading to this decision, and what he hopes will happen in the future.

History of Terrill Manufacturing Co.                                           

For 70 years, Terrill manufacturing has operated in San Angelo, and used to be one of the largest employers in the area, Rushin explained.

Clarence Terrill founded the three-generation old company in 1946, and began to expand as his team's woodwork grew in popularity.

Terrill started off by making ironing boards, and later moved towards architectural woodwork and case work (building commercial cabinets) in the 1980s.

Grandson Kent Terrill bought the company in the early 2000s from his father, who had taken over previously for Clarence.

The highest revenues peaked in 2008, but sales started to drop rapidly after that point, Rushin explained. In between 2010-13, there were significant losses in revenue that started to make the company “insolvent,” meaning they could not pay back the debts they owed.

Rushin became the majority owner and president of Terrill in 2013. He started making strides to improve the revenue of the company while still staying true to its stellar reputation.  

New Challenges

Since 2008, the revenue was $14.5 million, and, by 2013, dropped to $4.5 million.

“The company had no equity left, and, at this time, became insolvent,” Rushin said.

When Rushin took over as president, the company recorded roughly $6.4 million in revenue for 2014 and had over $1 million in profit. He noted $360,000 of that came from the income from operations.

“We successfully recapitalized the company, where our capital base was well over a million dollars,” Rushin explained.

These increases in revenue continued through 2015, but a new challenge immerged when Rushin was informed of a drastic change.

First Financial Bank in San Angelo had been in partnership with Terrill for close to 15 years, and the staff there suddenly informed Rushin they would no longer take on managing the company’s credit. He tried to understand why this change happened given the recent improvement in revenue.

“We attempted to find another commercial lender,” Rushin explained. “But because of the financial recession in 2008, banks required three years of increased profits before they would take on any businesses.”  

Terrill had only shown two years increase in profits at the time.

An alternative source of financing was decided on because other capital banks could not assist in presenting a new loan for Terrill. Thus, the business considered a factoring company called Vertex, but due to the company's rule of buying receivables to help with regaining working capital, an issue arose before the deal was finalized.

“Five of our clients didn’t want their receivables factored, so, as a result, that deal fell through,” Rushin said.

At this point, First Financial was willing to close Terrill despite its $4 million dollar contracts that still weren’t finished. Despite the consistent increase in profits, the bank was still set on the decision.    

“They treated us like we were a distressed business that was about to close,” Rushin said.

This result lead to the bank closing Terrill's checking accounts, and taking all the receivables Terrill collected. Around this time, Rushin made a deposit for a “significant” amount of money to help with making payroll for Terrill’s employees.

“The bank took it all,” Rushin explained. “My employees did not get paid.”

These kind of scenarios normally happen when a business is heading towards insolvency, not when profits are still being made, he noted.

Employment

When Rushin started at Terrill, there were 20 employees, compared to the 150 in the company’s forming years.

He recently had 51 employees on payroll before First Financial began closing their accounts. Because of this, a handful of Terrill’s employees had to register for unemployment due to this missed paycheck.

“In order to protect the employees, and to protect our venders who, without those accounts, also can’t get paid, I filed Chapter 11 bankruptcy under restructuring,” he explained.” “Take [this] out of the hands of the bank, and instead have the federal courts jurisdiction get involved.”  

He made it clear that Terrill is not “out of business,” and as the company starts to finish other projects, the employees who had to file for unemployment will have an opportunity to get rehired. All employees who missed their paycheck will also get the money back.   

Solutions

Rushin made a goal for Terrill to join the Texas Historically Underutilized Business’s (HUB), which looks to provide opportunities for minority businesses. This initiative made Terrill the only African American owned architectural woodwork in Texas, Rushin said.

Up until 2013, the main business partner for Terrill was K12 schools, and by taking advantage of being a minority business, Terrill started working contracts with state agencies. By working with these agencies, goals were established to make 40 percent of contracts go to HUB companies, and 20 percent with universities.  

This helps Terrill make contracts with universities across Texas and yields increased revenue for the company.

With schools like A&M leaving $8.8 billion dollars in bids available for architecture renovations, it is a prosperous time for companies in this industry. These renovations include lab tables, wall covers, windows frames, etc.

Rushin said his current goal is to bring revenue to around $12 million, and to reaffirm Terrill as one of San Angelo’s top employers.