Crucible Industries declares Chapter 11 bankruptcy

[Brock O Lee]

The stalking horse bid is not for all the assets of the company, only a very limited subset, including the CPM line of business, the IP, A/R, and Inventory.

Thanks 2HB!

What I get from all this is that Erasteel only wants the particle metallurgy "CPM" business and intellectual property. Not the rest of the steel works.

My assumption is that the CPM operation will likely move elsewhere, since it is part of the bigger factory, and Crucible leased the site. I have hope that the CPM steels will continue to be made, if on a different continent.

Not good news for the US workers unfortunately.

[RustyIron]

I'm not exactly following what all of this means, but what does the statement "but all other equipment and machinery located in Solvay is excluded." suggest? What equipment would this be and is it necessary to keep running the factory? I'm having a hard time deciphering whether any of this points to Erasteel wanting to keep the factory running or not.

I'm no lawyer, and I didn't even read the details all that closely. But it seems that Crucible doesn't even own the manufacturing facility. Erasteel wants the intellectual property, materials, work in progress, and machinery related to particle metallurgy. Clearly, that's where they see the potential for profitability.

It makes sense to continue PM production at the current facility for now. Will they continue to build and grow at the current facility? Will they shift production to a new facility? Will they move it to Europe? For the answer to these and other burning questions, get out the Magic 8 Ball.

[sal]

Hi 2HB,

Welcome to our um and thanx much for your information. Great stuff.

sal

[cabfrank]

Wow, 2HB, thanks for the great information and summary.

[Red Leader]

Well, there might be some good news to update things about the Crucible situation that I'm hearing from industry people at the show.

We'll see what happens. Maybe I'll have to buy Rusty a beer in the end.

I'll share more later.

With this news of Crucible, is there any speculation on Spyderco relying more heavily on Seki City to fill the gaps if there are any? I'm looking for any possible reason for there to be more K390 to exist in the lineup.

No

I'm interested to hear more. We (the fam) have Spydercos in S30V, 15V, Rex-121, Magnacut, S45VN and others so it does matter to me. I don't know about the logistics in place, meaning, how much of 'XX' type of steel is purchased already and held in reserve for future knife production and for how long, or how long Crucible may be making these specialty steels. Or will it just keep on going even if they are bought out? Or have they already stopped with the specialty stuff and focused on more breadwinner type contracts? Probably pointless to armchair this one until more is known.

Is the Niagra thing just speculation at this point? If supply theoretically dries up, is it easier to try to get the a new/similar formulation from other suppliers or to, even if temporarily, just make the same knives but out of different, and currently available steel. Maybe either way they'll have a different steel name on the blade.

Hoping for good news. Please do share when you are able.

[SpyderEdgeForever]

Two questions:

1 are there a couple of American billionaires we can all contact and ask them to buy Crucible's debt and keep the company going? In the long term they would save jobs and have a great business.

2 Do you think all the CPM employees own Spyderco and other knives with their steel?

[sal]

Frankly, we don't know yet what to expect. Crucible makes a lot of great alloys that we use. It would be a shame to lose them.

sal

[SpyderEdgeForever]

Frankly, we don't know yet what to expect. Crucible makes a lot of great alloys that we use. It would be a shame to lose them.

sal

Agreed. I will tell you this, sal. No matter what happens, in me and many others on this forum you have a very happy, satisfied, and loyal customer for life. Thank you.

[JMM]

For those that are interested in seeing some of the patents Crucible has, Google Patents is an exceptional resource...
https://patents.google.com/?assignee=Cr ... of+America

And if you are interested browsing some super cool Spyderco patents...
https://patents.google.com/?assignee=SPYDERCO%2c+INC.

[edit: fixed typo]

[cjk]

Frankly, we don't know yet what to expect. Crucible makes a lot of great alloys that we use. It would be a shame to lose them.

sal

I know that Spyderco owns the SPY27 trademark. I'm curious if the formulation of SPY27 is patented? I quite like it and sincerely hope it has some sort of path forward regardless.

[Deadboxhero]

We are currently waiting until near the end of February to see what's going to happen.


If Erasteel wins the auction there will be no more US particle metallurgy steel produced on US soil.

Erasteel has made it clear they are going to shut down the Crucible mill in Geddes, NY. However, it's not personal. It's just that facility is extremely old and would require a substantial financial investment to upgrade and continue running.




Erasteel already has three facilities that make powder in Sodorfors, Sweden.

Erasteel also already makes powder for Carpenter.


As for the hope of the Crucible facility staying open on US soil, there are other entities that are interested in purchasing the aged Crucible facility. However, there were no names of the other players involved.

So, we are currently waiting to see what the outcome will be this February.


Before anyone gets their hopes, even if the mill is purchased, the Crucible mill faces a significant challenge moving forward requiring extreme upgrading of the facility and equipment that has been long overdue.

After speaking to many industry folks at Shot Show 2025 including lots of ex-crucible employees that have moved on to work for other steel companies and other steel industry professionals.

It was interesting to learn that the downfall of Crucible was more like death by a thousand cuts rather than a singular event that caused this current crisis.

Basically, Crucible has not been very profitable for a long time and they were not able to generate the revenue needed to reinvest into their facility.

They were always doing more with less so they certainly deserve our admiration.

It should be noted that the knife industry simply does not generate enough revenue to support a PM steel mill

As I was told by industry folks a steel mill makes money per ton not per pound.

This is why industrial customers, especially in the automotive sector are very important, but as we all know the global economy has been pushing a lot of manufacturing overseas for many decades.

So, the knife industry has always siphoned off of the steel industry.

That's why it was always rare to see a steel purpose built for knives, especially using the PM technology.


Hopefully that shares some perspective for some folks.

Regardless of what happens we will still get the popular PM steel grades thanks to Niagara Specialty Metals.

[RustyIron]

Hopefully that shares some perspective for some folks.

Thanks. All that you've said makes logical sense.

I got curious and started googling on Erasteel. The cool thing was a video on "near net shape" casting. That's a subject being discussed in another thread, so I won't go into it here. But it's cool to see that they're doing it, and not just that other company who makes gun parts and knives.

The other interesting thing is that Erasteel was purchased just over a year ago by an international investment company. The CEO has a long résumé with positions running other successful companies.

Might a big dog like Erasteel be better able to meet customer demand? Might they be able to provide the products we want at a better price? One can only wonder.

[Enactive]

Thanks for the update, Shawn @Deadboxhero.

@RustyIron Swedish efficiency and metallurgical expertise are a real thing, if we're lucky they will shine for us here if the Erasteel deal goes.

[WilliamMunny]

We are currently waiting until near the end of February to see what's going to happen.


If Erasteel wins the auction there will be no more US particle metallurgy steel produced on US soil.

Erasteel has made it clear they are going to shut down the Crucible mill in Geddes, NY. However, it's not personal. It's just that facility is extremely old and would require a substantial financial investment to upgrade and continue running.




Erasteel already has three facilities that make powder in Sodorfors, Sweden.

Erasteel also already makes powder for Carpenter.


As for the hope of the Crucible facility staying open on US soil, there are other entities that are interested in purchasing the aged Crucible facility. However, there were no names of the other players involved.

So, we are currently waiting to see what the outcome will be this February.


Before anyone gets their hopes, even if the mill is purchased, the Crucible mill faces a significant challenge moving forward requiring extreme upgrading of the facility and equipment that has been long overdue.

After speaking to many industry folks at Shot Show 2025 including lots of ex-crucible employees that have moved on to work for other steel companies and other steel industry professionals.

It was interesting to learn that the downfall of Crucible was more like death by a thousand cuts rather than a singular event that caused this current crisis.

Basically, Crucible has not been very profitable for a long time and they were not able to generate the revenue needed to reinvest into their facility.

They were always doing more with less so they certainly deserve our admiration.

It should be noted that the knife industry simply does not generate enough revenue to support a PM steel mill

As I was told by industry folks a steel mill makes money per ton not per pound.

This is why industrial customers, especially in the automotive sector are very important, but as we all know the global economy has been pushing a lot of manufacturing overseas for many decades.

So, the knife industry has always siphoned off of the steel industry.

That's why it was always rare to see a steel purpose built for knives, especially using the PM technology.


Hopefully that shares some perspective for some folks.

Regardless of what happens we will still get the popular PM steel grades thanks to Niagara Specialty Metals.

Thanks for the update. “Do more with less”, think that is the moto of my employer, so I can definitely see how a great group of hardworking employees with a great product can fail.

Will be said to see CPM go away but great to heard we will still have steel for knives.

[SpeedHoles]

We are currently waiting until near the end of February to see what's going to happen.


If Erasteel wins the auction there will be no more US particle metallurgy steel produced on US soil.

Erasteel has made it clear they are going to shut down the Crucible mill in Geddes, NY. However, it's not personal. It's just that facility is extremely old and would require a substantial financial investment to upgrade and continue running.




Erasteel already has three facilities that make powder in Sodorfors, Sweden.

Erasteel also already makes powder for Carpenter.


As for the hope of the Crucible facility staying open on US soil, there are other entities that are interested in purchasing the aged Crucible facility. However, there were no names of the other players involved.

So, we are currently waiting to see what the outcome will be this February.


Before anyone gets their hopes, even if the mill is purchased, the Crucible mill faces a significant challenge moving forward requiring extreme upgrading of the facility and equipment that has been long overdue.

After speaking to many industry folks at Shot Show 2025 including lots of ex-crucible employees that have moved on to work for other steel companies and other steel industry professionals.

It was interesting to learn that the downfall of Crucible was more like death by a thousand cuts rather than a singular event that caused this current crisis.

Basically, Crucible has not been very profitable for a long time and they were not able to generate the revenue needed to reinvest into their facility.

They were always doing more with less so they certainly deserve our admiration.

It should be noted that the knife industry simply does not generate enough revenue to support a PM steel mill

As I was told by industry folks a steel mill makes money per ton not per pound.

This is why industrial customers, especially in the automotive sector are very important, but as we all know the global economy has been pushing a lot of manufacturing overseas for many decades.

So, the knife industry has always siphoned off of the steel industry.

That's why it was always rare to see a steel purpose built for knives, especially using the PM technology.


Hopefully that shares some perspective for some folks.

Regardless of what happens we will still get the popular PM steel grades thanks to Niagara Specialty Metals.

Interesting, I didn't realize Era already supplied Carpenter.


...also, can we blame blade length laws here for the downfall!? Maybe if we all carried and owned several dozen swords instead of small folding knives then they could have gotten their margins back in check over the years!

[Danke]

We are currently waiting until near the end of February to see what's going to happen.


If Erasteel wins the auction there will be no more US particle metallurgy steel produced on US soil.

Erasteel has made it clear they are going to shut down the Crucible mill in Geddes, NY. However, it's not personal. It's just that facility is extremely old and would require a substantial financial investment to upgrade and continue running.




Erasteel already has three facilities that make powder in Sodorfors, Sweden.

Erasteel also already makes powder for Carpenter.


As for the hope of the Crucible facility staying open on US soil, there are other entities that are interested in purchasing the aged Crucible facility. However, there were no names of the other players involved.

So, we are currently waiting to see what the outcome will be this February.


Before anyone gets their hopes, even if the mill is purchased, the Crucible mill faces a significant challenge moving forward requiring extreme upgrading of the facility and equipment that has been long overdue.

After speaking to many industry folks at Shot Show 2025 including lots of ex-crucible employees that have moved on to work for other steel companies and other steel industry professionals.

It was interesting to learn that the downfall of Crucible was more like death by a thousand cuts rather than a singular event that caused this current crisis.

Basically, Crucible has not been very profitable for a long time and they were not able to generate the revenue needed to reinvest into their facility.

They were always doing more with less so they certainly deserve our admiration.

It should be noted that the knife industry simply does not generate enough revenue to support a PM steel mill

As I was told by industry folks a steel mill makes money per ton not per pound.

This is why industrial customers, especially in the automotive sector are very important, but as we all know the global economy has been pushing a lot of manufacturing overseas for many decades.

So, the knife industry has always siphoned off of the steel industry.

That's why it was always rare to see a steel purpose built for knives, especially using the PM technology.


Hopefully that shares some perspective for some folks.

Regardless of what happens we will still get the popular PM steel grades thanks to Niagara Specialty Metals.

Interesting, I didn't realize Era already supplied Carpenter.


...also, can we blame blade length laws here for the downfall!? Maybe if we all carried and owned several dozen swords instead of small folding knives then they could have gotten their margins back in check over the years!

Oh yeah I've watched a lot of Forged in Fire and one car = four knife blades so we could definitely turn the tide on steel demand. I've bought half a car already this year.

[SpeedHoles]

We are currently waiting until near the end of February to see what's going to happen.


If Erasteel wins the auction there will be no more US particle metallurgy steel produced on US soil.

Erasteel has made it clear they are going to shut down the Crucible mill in Geddes, NY. However, it's not personal. It's just that facility is extremely old and would require a substantial financial investment to upgrade and continue running.




Erasteel already has three facilities that make powder in Sodorfors, Sweden.

Erasteel also already makes powder for Carpenter.


As for the hope of the Crucible facility staying open on US soil, there are other entities that are interested in purchasing the aged Crucible facility. However, there were no names of the other players involved.

So, we are currently waiting to see what the outcome will be this February.


Before anyone gets their hopes, even if the mill is purchased, the Crucible mill faces a significant challenge moving forward requiring extreme upgrading of the facility and equipment that has been long overdue.

After speaking to many industry folks at Shot Show 2025 including lots of ex-crucible employees that have moved on to work for other steel companies and other steel industry professionals.

It was interesting to learn that the downfall of Crucible was more like death by a thousand cuts rather than a singular event that caused this current crisis.

Basically, Crucible has not been very profitable for a long time and they were not able to generate the revenue needed to reinvest into their facility.

They were always doing more with less so they certainly deserve our admiration.

It should be noted that the knife industry simply does not generate enough revenue to support a PM steel mill

As I was told by industry folks a steel mill makes money per ton not per pound.

This is why industrial customers, especially in the automotive sector are very important, but as we all know the global economy has been pushing a lot of manufacturing overseas for many decades.

So, the knife industry has always siphoned off of the steel industry.

That's why it was always rare to see a steel purpose built for knives, especially using the PM technology.


Hopefully that shares some perspective for some folks.

Regardless of what happens we will still get the popular PM steel grades thanks to Niagara Specialty Metals.

Interesting, I didn't realize Era already supplied Carpenter.


...also, can we blame blade length laws here for the downfall!? Maybe if we all carried and owned several dozen swords instead of small folding knives then they could have gotten their margins back in check over the years!

Oh yeah I've watched a lot of Forged in Fire and one car = four knife blades so we could definitely turn the tide on steel demand. I've bought half a car already this year.

Oh boy, I don't want record of this knowledge, if my wife finds out I've bought several cars now without telling her!

[Brock O Lee]

Few CPM heavyweights

[Rinzler]

Hopefully you found this helpful to understand Crucible's bankruptcy. Happy to address any questions if you have any.

Thanks for posting. It sounds really complicated.

The exhibits to the APA with Erasteel shows that it is purchasing inventory, WIP, A/R, and only the induction furnace, HIP equipment, and CPM melt shop tools

Now that is reason to be optimistic--optimistic that when it's all said and done, I'll be sitting back enjoying a room-temperature stout courtesy of Deadboxhero.

I'm not exactly following what all of this means, but what does the statement "but all other equipment and machinery located in Solvay is excluded." suggest? What equipment would this be and is it necessary to keep running the factory? I'm having a hard time deciphering whether any of this points to Erasteel wanting to keep the factory running or not.

It essentially means that erasteel only has interest in certain specific physical equipment and the IP. They don’t care about the rest of what is being offered and the facility will shutdown and likely be decommissioned after the desired equipment is removed.

I have to wonder if they are successful in their bid, if they will be on the hook for environmental remediation costs. Getting caught up in that could be an unintended way to be required to pay hundreds of millions in future consent decree costs even if the equipment and IP is only 10ish million.

[sv4]

There has been sustained interest regarding Crucible's bankruptcy and I thought I would take a moment to provide some detail as this is an area of familiarity for me. The following is taken from filings with the Court, which are a matter of public record. If someone can tell me how to upload a PDF, I will happily share them on the forum.

The following information is taken from three documents: the "First Day Affidavit," the "Schedules and Statement of Financial Affairs," and the "Sale Motion." The First Day Affidavit is a filing generally singed by the CEO providing general information about the company, its business, and why it is seeking bankruptcy protection. The Schedules and Statement of Financial Affairs are documents required to be filed with the Court listing, in great detail, the company's assets and liabilities. The Sale Motion lists the sale procedures for the sale of the company's assets.

The First Day Affidavit

After review, here are the interesting bits contained in First Day Affidavit:

[*]The corporate office is located in Cleveland, Ohio.
[*]The manufacturing facility is located in Solvay, New York.
[*]90% of its base material is scrap and revert.
[*]The company has 170 full time employees; unionized.
[*]Average weekly payroll for hourly employees is $155,000.
[*]Average bi-monthly salaries is $130,000.
[*]The company leases the manufacturing facility in Solvay from Syracuse Real Estate, LLC, which has common ownership with the company.
[*]Is the sole or nearly sole provider of specialty products for a number of its customers (none specifically listed).
[*]Bankruptcy is attributed to softening demand and price competitions with larger companies.
[*]In April 2024, it began marketing its assets for sale through the Caliber Group, LLC.
[*]Caliber sent promotional materials to 67 potential buyers, 18 of which executed an NDA, six of whom toured the facility, and four that made bids.

Schedules and Statement of Financial Affairs

Here is some information from the Schedules and Statement of Financial Affairs:

[*]The company does not own any real property.
[*]Has secured debt (i.e., bank debt with mortgage and/or security interest) of $21,433,992.
[*]Has unsecured debt (i.e., trade debt) of $11,273,768.
[*]Total debt of $32,707,761.
[*]Assets include raw materials, WIP, Intellectual Property, A/R valued at $27,937,761. (But value for IP is listed as unknown).
[*]Includes an Exhibit showing all trademarks and includes "REX," "10V," "15V," "CRU-Wear," "REX 121," "Magnacut," etc.
[*]Also shows patents it holds, only two of which are in the United States (Patent Nos. 7615123 and 7288156). (The patents only show the content of the alloy using google patents, not any identifying names. I will leave it to others to figure out what alloy they actually pertain to.) Interestingly, the longest patents it holds expires in 2028, most expire sooner than that.

The Sale Motion

Here is the pertinent information in the Sale Motion:

[*]Erasteel, Inc., is the stalking horse bidder. A stalking horse bidder agrees to buy the assets subject to higher and better bids.
[*]The stalking horse bid is not for all the assets of the company, only a very limited subset, including the CPM line of business, the IP, A/R, and Inventory.
[*]The stalking horse bid is, after adjustments, estimated to be between $11-12 million (the gross bid is appx. $17 million).
[*]A party who wishes to bid on the assets must become a "qualified bidder" by executing an CA, providing financial statements and other evidence it can perform and submit a bid that exceeds the stalking horse bid by appx. $620,000 (to cover the break up fee paid to Erasteel to serve as stalking horse bidder in the amount of $520,000 plus an additional $100,000).
[*]The bid deadline is January 30, 2025.
[*]The auction (if there is at least one bidder) is February 4, 2025.
[*]The hearing to approve the sale is February 6, 2025.
[*]The exhibits to the APA with Erasteel shows that it is purchasing inventory, WIP, A/R, and only the induction furnace, HIP equipment, and CPM melt shop tools but all other equipment and machinery located in Solvay is excluded. Based upon exhibits (which are interesting and place a value on inventory and WIP, it appears that Niagara, ZAPP, and Latrobe may be the company's biggest customers).
[*]The bidding procedures, however, allow a bidder to bid on all assets (or what it calls Lot 2 assets in the motion) or bid on a mix and match basis.

Hopefully you found this helpful to understand Crucible's bankruptcy. Happy to address any questions if you have any.

Thanks, 2HB. This really helps one to understand the current Crucible situation.