Am I Next? Ei Solutionworks - Product Quest - Mass Layoffs - Bankruptcy

Charlotte, North Carolina-based Ei SolutionWorks, a division of Daytona Beach, Florida-based Product Quest LLC, abruptly shut down their Kannapolis, North Carolina facility and laying off 296 employees. The company which develops, manufactures, and packages topical medicines, skincare products and other topical liquid, semi-solid, and loose powder products for the healthcare and other industries has ceased operations. The parent corporation, Product Quest, has also announced the layoff of 300 employees in their Holly Hill, Florida facilities.

Both facilities appear to have cross-contamination problems that resulting in the U.S. Food and Drug Administration warnings and the voluntary recall of some products.

The FDA noted that “machines used to manufacture pesticides were also used to manufacture medications and were not properly or thoroughly cleaned between batches.” In response to the company’s reply, the FDA wrote, “Your response is inadequate because it only addressed the potential for contamination of your drugs by the pesticides you were manufacturing in the same facility. You did not evaluate the potential cross-contamination of your human drugs with other human drugs you manufacture and have not demonstrated that your cleaning procedures ensure that your drugs are not cross-contaminated with other human drugs,” the notice said. “… Your response did not fully assess the effect of your failure to adequately investigate contamination on the quality and safety of your drugs on the market within expiry.”

Am I Next? Product Quest Bankruptcy and Mass Layoff.

The parent corporation, Product Quest, has filed for Chapter 11 Bankruptcy relief. A court filing by employees (Case 18-50946 Doc 36 Filed 09/12/18) alleges violation of the federal WARN act relating to mass layoffs and additional state violations.

Among the allegations, “Defendants’ business failures were caused by ineffective senior leadership, employee turnover, extensive product quality issues, the recall of products manufactured at the Daytona Facility, as well as stability, contamination, and regulatory compliance issues at the Kannapolis Facility. In the fall of 2017, Defendants suffered from severe financial and operational difficulties, including key vendors placing the company on credit hold. These issues were caused by poorly executed growth plans, which led to extensive inventory issues and significant subsequent write-offs. Additionally, Defendants suffered from operational cost overruns, ineffective production standards and poor pricing practices leading to significant margin erosion. Upon information and belief, as far back as September 2016, Defendants were in default under the terms of its senior secured credit facilities. Upon information and belief, at all relevant times, the Daytona Facility had consistent problems with quality control of the products manufactured there, no effective system in place for addressing these issues, and old equipment that did not comply with cGMP manufacturing practices.”

Clearly the handwriting was on the wall, if not for manufacturing process failures then from financial difficulties.

Are you wondering, Am I Next?