Krystal Infinity LLC, a Brea-based limousine manufacturer that Chinese battery magnate Winston Chung bought a stake in early last year, has filed for bankruptcy and is considering a sale.
The company, which last year took over the operations of Krystal Koach Inc., one of the country’s largest makers of limousines, filed for Chapter 11 bankruptcy protection last week in Santa Ana.
The bankruptcy filing shows Krystal Infinity having between $10 million and $50 million in both assets and liabilities.
The company, which also operates under the Krystal Enterprises name, said it has about $30 million in sales so far this year, and about $54 million last year. Court filings did not disclose whether the company has been profitable over that time.
The operations of the limo maker peaked in 2007, when annual revenue topped $150 million.
The company cited a cash crunch that’s keeping it from finishing work on more than 50 limos currently in the early stages of production as a primary reason for the bankruptcy filing.
Krystal Enterprises is trying to find a buyer for its business, or an investor to provide it with additional cash to finish work on those and other limos, according to a court filing by Ed Grech, the founder of the limousine maker.
The company’s nearly 114,000-square-foot headquarters facility at 2701 E. Imperial Highway is currently on the market for sale. Brokerage data show that the building, owned by an affiliate of Krystal Infinity, has a $14.5 million asking price.
A second Brea facility owned by an affiliate of the company, totaling about 65,000 square feet and now empty, also is on the market for sale. It’s valued at nearly $4 million.
Most of Krystal Infinity’s manufacturing operations moved to Mexico in the past few years as the company sought to cut costs as demand for limos fell.
The company’s local operations now largely focus on marketing and distribution.
2nd Reorganization
It’s the second stint in bankruptcy for Krystal Infinity and its predecessor companies since 2010. The operation emerged from its last reorganization in January 2011, after Chung made a reported $9 million investment in the company.
Chung—a wealthy lithium battery inventor who made his fortune in China, and who made waves in Orange County business and real estate circles last year—is a co-principal with Grech in Krystal Infinity.
The company got its start nearly 30 years ago when Grech was working in auto repair and suggested to employees that a fire-damaged Cadillac be cut in half and stretched into a limousine.
The company now makes stretch Ford and Lincoln limousines, sport utility vehicle limousines, shuttles, hybrid buses and hearses.
It sells vehicles to limousine operators, dealerships, corporations, casinos and individuals.
China Slowdown
Krystal Infinity’s court filings cite a depressed market for limo sales both in the U.S. and China, a lukewarm reception to a new limousine model, and Chung’s personal finance issues as reasons for the company’s latest troubles.
The domestic market for limos remains slow, and a bulk of the company’s 2011 sales came on exports to China, according to court filings.
A slowdown that set into China’s economy late last year saw Krystal Infinity’s export sales “fall from an average of 30 units per month in 2011 to 0 units per month in the second quarter of 2012,” according to court filings.
Also, an expected boost in limo sales from Ford Motor Co.’s redesign of its dated Lincoln Town Car chassis failed to materialize over the past year, according to court filings.
“All indicators were this would be a sales bonanza,” Grech said in a court filing. So far, sales “have been substantially lower” than anticipated, he said.
Chung’s widely reported challenges in getting funds out of China over the course of the past year have also played a part in the company’s troubles, according to court filings.
While Chung “has invested millions of dollars into the debtor, I expected the (company) to receive an additional $5 million from Mr. Chung which was never provided,” Grech said in court filings.
Last year’s investment in Krystal Infinity was the first prominent OC deal struck by Chung, a proponent of electric-powered vehicles that use batteries his companies have developed.
Last Summer
Chung made waves here last summer when he announced plans to buy The Balboa Bay Club & Resort and the Newport Beach Country Club.
That deal fell apart after Chung reportedly had issues getting funds out of China to complete the sale. Both clubs were subsequently sold to a local investment group.
Chung also made a $10 million donation to the University of California, Riverside’s Department of Engineering, and investments in several other Southern California companies, last year.
