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Artech Printing Crumbles into Oblivion

July 2001
STURTEVANT, WI—After only one year, the lifeline that was thrown to the former Western Publishing/Golden Books Family Entertainment printing facility here has been severed, leaving more than 200 workers unemployed.

Two years after it had filed for bankruptcy protection as Golden Books Family Entertainment, and one year after Wisconsin Governor Tommy G. Thompson cut the ribbon on the company's rebirth as Artech Printing—under the leadership of primary owners David Watson and Jean Castonguay—the printer of primarily children's books came to a messy end in bankruptcy court.

On March 2, a federal bankruptcy judge decreed that Artech Printing must cease operations after filing for involuntary bankruptcy, sending the remaining 100 employees packing.

Watson and Castonguay, the primary owners of Artech Printing, acquired the plant in December 1999 and assumed $3 million in Golden Books state loans and a $750,000+ loan from the Racine County Economic Development Corp. But a little more than a year later, and $10 million in debt, Artech filed to liquidate its Sturtevant assets and the company went into receivership.

On February 1, employees asked a state court to prevent the company from selling off its equipment as they scrambled to organize an effort to purchase the business. By the end of the month, though, employees filed for the involuntary bankruptcy.

And although the state attorney general's office has filed a $5.25 million claim on the assets in federal bankruptcy court (the physical assets were scheduled to be auctioned June 18) to recover lost wages and benefits, the prospects of collecting are dim. Artech's largest customer, Golden Books Family Entertainment—ironically, the publisher that used to own the printer—filed for Chapter 11 bankruptcy in June, the second time it has filed in as many years. Golden Books is in the process of being sold to DIC Entertainment Holdings for $170 million.

The Milwaukee Journal-Sentinel reported that union representatives of former Artech Printing workers charged that Artech executives received too much money in consulting and management fees. The Wisconsin State Attorney General's office is conducting a preliminary investigation into allegations that monies are missing from the company, but no individual or individuals have been targeted.

Watson, who categorically denies that there is any missing money from the company, points out that deal financier GE Capital, along with the receivership and bankruptcy trustee, all did their own thorough investigations and found no evidence that would support a claim of impropriety. To date, there is no indication of a formal investigation nor a move to form a grand jury, he adds.
 

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