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Steel distributor UPG Enterprises has turned to bankruptcy court as it seeks to put fresh momentum behind an asset sale already in motion.

The Illinois-based company filed for Chapter 11 protection Tuesday, saying the restructuring process could help attract additional interest in its assets and make a potential transaction easier to complete. UPG disclosed the filing Wednesday, outlining a plan that could reshape the company's future while keeping its business relationships intact.

The case comes as UPG works to sell its assets and transition the business to new ownership. The company has also received a proposed $6.1 million debtor-in-possession financing package to help keep operations and the sale process moving during the bankruptcy.

UPG Files for Chapter 11 Amid Asset Sale Effort

According to its bankruptcy filing, UPG listed between $1 million and $10 million in assets and between $10 million and $50 million in liabilities.

Rather than allowing the bankruptcy to bring its sale plans to a standstill, the company says Chapter 11 will serve as a mechanism to help accelerate the process. The restructuring is designed to create a pathway for potential buyers to acquire the company's assets free and clear of certain liabilities and claims, potentially making the assets more attractive to investors.

UPG plans to complete the sale process within roughly 60 days, according to the company's Wednesday announcement.

Bankruptcy Intended to Clear Path for New Ownership

John Sordillo, UPG's chief restructuring officer, said the Chapter 11 process is expected to provide a route for new investment while protecting relationships that remain central to the company's operations.

He said sales conducted through Chapter 11 can allow the company's assets to move to new owners without the burdens that might otherwise complicate a transaction. UPG also expects to maintain important connections with customers, employees and business partners while the proceedings unfold.

The strategy effectively puts the company's sale process on a faster track, with bankruptcy court serving as the framework around a transaction already underway.

$6.1 Million Financing Could Support Restructuring

To help fund the Chapter 11 case, UPG has an offer for $6.1 million in debtor-in-possession financing.

DIP financing is commonly used in bankruptcy proceedings to provide companies with access to capital while they reorganize or sell assets. For UPG, that financing could provide the financial runway needed to continue operating and pursue the sale without bringing the business to a halt.

The company's financial disclosures show a significant gap between its reported assets and liabilities, adding urgency to the effort to maximize value through the sale process.

Sale Process Expected to Move Quickly

UPG said it expects the asset sale to be completed within 60 days. That compressed timeline places the company's restructuring and sale efforts on parallel tracks, with potential buyers now watching an opportunity that could change hands under Chapter 11 protections.

The company has not disclosed further details about prospective buyers or the precise assets included in the sale beyond its announcement that the process is already underway.

Legal Team Guides UPG Through Bankruptcy

UPG is represented by Michael M. Eidelman of Vedder Price PC and Morris Nichols Arsht & Tunnell LLP in the Chapter 11 proceedings.

As UPG moves through bankruptcy court, the company's strategy will hinge on whether the sale process can attract sufficient interest and generate a transaction capable of addressing its liabilities while preserving value in its operating business.

For now, UPG's bankruptcy filing is less an endpoint than a new chapter in an already-running sale process — one the company hopes can be completed within weeks rather than months.