By JOAN MCCOY
Leader staff writer
Bancroft Cap Co. in Cabot, the only company currently under contract with the Department of Defense to supply the U.S. military black berets, has dropped the hat and filed for Chapter 11 bankruptcy in federal court, forcing the Pentagon to look for a new domestic supplier. There may not be another U.S. company that can supply the military with 100 percent domestic materials, which was Bancroft’s downfall: It got caught mixing domestic and foreign wool and leather, which is in violation of U.S. law.
But the Pentagon has enough berets to last till the end of the year, a military spokesperson told The Leader. When the Pentagon demanded return of more than a million dollars that it had paid Bancroft for berets with foreign materials — as The Leader reported earlier this month — the troubled company realized it had no choice but to file for bankruptcy protection. On Tuesday, Christina DiMemmo, a military spokesperson, said the procurement agency was aware of the bankruptcy. Asked who will supply the required two black berets for every member of the Army and Air Force if Bancroft goes out of business because it can’t pay its debts, DiMemmo said she didn’t know, but she would find out if there are other companies that can gear up for production.
The company opened for business in 1967 and closed its doors a month ago. In filing Jan. 16, the company listed assets of $3.9 million and liabilities of $1.9 million. Among its creditors are Cabot businesses like Alarm Works of AR, Inc., Arkansas Auto Sprinkler, Cabot Handy Hardware and Express Printing, which are owed from $10 to several hundred dollars. Shippers like UPS (owed more than $11,000) are also included, as are the suppliers of the materials the company needed to make its berets, caps and other products, such as insulated cloth coolers and embroidered clothing. If the court grants Bancroft Chapter 11 protection, creditors will not be allowed to collect what is owed them except through the court. Generally, companies keep operating through the except through the court. Generally, companies keep operating through the bankruptcy.
Not listed among the creditors is the Department of Defense, the company’s biggest customer, which alleges that Bancroft owes the government repayment for 340,000 black berets at about $4 each which were shipped before March 2006. Those berets were paid for and then later found to contain either foreign wool or leather and therefore unacceptable. Whether Bancroft concedes that its berets contained materials not produced in the U.S. is not known because repeated attempts to contact owner Barry Goldman have failed.
Diana Stewart, chief of corporate communications with Defense Supply Center Philadelphia, a procurement agency for the Department of Defense, said earlier this month that Bancroft has not been paid for 4,992 berets delivered in March 2006 that did not contain foreign components. The payment for that shipment was applied to the debt the DOD says Bancroft owes the government, Stewart said.
The DOD has not received the 354,504 berets that were supposed to be shipped in July, she said, so Bancroft’s contract is in default. The July shipment was to be the company’s last of a $14.8 million contract for up to 3.6 million berets which started in 2002. Stewart said the company has enough black berets for a year.
Stewart said even without the last shipment from Bancroft, the DOD has enough black berets stockpiled to meet its needs for a year.
