Kimtruss Files for Chapter 11 Reorganization : * Bankruptcy: The Irvine building materials supplier cites drop in sales and increasing business costs.

Crippled by the deeply troubled housing industry, Kimtruss Corp., a major building materials supplier headquartered in Irvine, has filed for a Chapter 11 bankruptcy reorganization.

The 24-year-old company is the largest of a steadily growing list of builders, real estate investment groups and materials suppliers that have filed for protection from creditors under federal bankruptcy law in the past year.

In its petition, filed Tuesday in U.S. Bankruptcy Court in Santa Ana, Kimtruss listed $17.6 million in assets and $14.9 million in liabilities.

Lance J. Lloyd, Kimtruss president and co-owner, said Thursday that the firm has idled three factories and laid off 310 employees since early 1990.

“We just can’t meet our (debt) commitments at the level of business we have today,” Lloyd said.

He said he and two partners purchased Kimtruss from Australian Consolidated Industries Ltd. in a leveraged buyout in 1987, when the company had about $20 million in annual sales. In a leveraged buyout, the company’s own assets are used to secure the loan the buyers obtain to finance the purchase.

“The borrowings we built the corporation on when the (leveraged buyout) was done in 1987 just can’t be supported by the level of business there is today,” Lloyd said. “Once you disturb the growth levels with the kind of debt load we took on, you get a wave effect that tends to swamp you.”

He said the company owes about $9 million to Sanwa Business Credit Corp., which financed the purchase. The lender is a subsidiary of Japan’s Sanwa Bank.

Before the housing market hit the skids last year, he said, annual sales had soared to nearly $33 million.

He said the company, which manufactures prefabricated roofing trusses--or joist systems--for the residential building industry, “will be very lucky” to reach $15 million in sales for its fiscal year that ended June 30.

Besides the debt problem, Lloyd said the company has been hurt because its business costs--rent, insurance, utilities and raw materials--have not declined along with sales.

A particular hardship, he said, has been an increase in state workers’ compensation insurance premiums.

“I understand and support the social obligation of an employer to obtain compensation insurance, but the state system has raised rates in the last year so that we are now paying close to 5% of our total sales. It was just about 1.5% of sales before the increase,” he said.

In its bankruptcy petition, Kimtruss listed the state workers’ compensation fund as a major creditor. The company owes the fund about $250,000, Lloyd said.

To help slash expenses, Kimtruss since March, 1990, has closed three manufacturing locations, in Hemet, Oxnard and the Northern California community of Madera.

The company had cut its payroll from 460 to 150 employees at its corporate offices in Irvine and at factories in Chino and near Stockton.