Keisler Engineering Filed for Bankruptcy

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Longgone

John/68 Barracuda & Dart
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I received an e-mail from Keisler Engineering today. They are filing for bankruptcy. The e-mail reads like this:






Dear JOHN



Last Thursday January 16, I ceased operations of Keisler Engineering Inc by filing it into a Chapter 7 Liquidation Bankruptcy. This was a sad day for our customers, vendors, employees and families, many of which had been with us for 5-10 years. And this brought to a close a 22 year long run of the company I started in my garage in 1991 that grew to become the innovator and leader of the 5-speed overdrive transmission market for muscle cars and Corvette.



Why Close Keisler Engineering Now?



The decision to close Keisler Engineering Inc in Chapter 7 Liquidation is covered in some detail on our Facebook page here. Another reason why I decided to place the company into a Chapter 7 liquidation type bankruptcy was to cleanse the assets of the liabilities that were preventing the company from thriving financially as well as providing the highest level of customer service our customers deserved. The liabilities and overhead of KE coupled with my own personal financial liabilities that lingered from the $4 Million acquisition of GM's Muncie Transmission equipment purchase in 2006 made it impossible for me to bring in financing and working capital needed to get KE operating in the "sweet spot" where orders ship 100% complete and with quick delivery. It was time to hit the START OVER button - both for the company and myself to get out of the financial entanglements. As of January 16 2014, that process of start over has begun.



The closing of the company and the many vendors and customers affected rests completely on my shoulders as the President & CEO. There is no good time when it comes to closing a company, but it was my fiduciary duty to take the action needed to prevent further loss to the customers and vendors. From Dec 6 to approximately Jan 15, more than 122 transmission orders were shipped out the door, plus a whole lot of parts orders. We finished out the 2013 year with over 1,000 transmissions shipped. Had we completed all orders on the books at the time of closure the number would have been closer to 1,300 transmissions. About half of the unfilled units were SS700 which I came to the conclusion would be impossible to fill swiftly.



What Happens to Keisler Engineering in Chapter 7 Bankruptcy?



The court assigned Mr. John Newton of Mayer & Newton as the appointed Trustee to Keisler Engineering's case. Mr. Newton has determined it is in the best interest of the creditors that Keisler Engineering be sold as either:

1) Complete & Fully Intact Operation Asset, OR

2) grouped assets that comprise the whole operation



This means the Buyer(s) could purchase the Assets including the Trademarked name, website, customer list, designs and inventory ... everything - clean and free of any Liabilities or entanglements, and put them back to work at the same facility or a facility of the Buyer's election. There is more than $400,000 of Inventory assets. And there are important pieces of machinery such as the Spin Test Machine.



Mr. Newton further states that he would like to select a Buyer in the coming 4-6 weeks, and get the sale approved by the Court in swift fashion.



There is a small amount of component parts product ready to ship, like special order driveshafts, that Mr. Newton would like to get shipped to customers in the coming 1-2 weeks.



Who can be a Buyer of the Keisler Engineering Operation?



YOU can be a Buyer. There are NO restrictions. If you are a Creditor to KE in the Ch7 Schedule F, you can be a Buyer. But your Creditor claim amount does not serve to "credit bid" meaning new money would need to be provided.



The operation can be started in the existing facility immediately, or preferably relocated to a smaller facility nearby with lower overhead, or even moved out of state. Most of the Keisler Engineering employees are available to be hired as of January 23. I am also available to support the start-up and long term go-forward.



IF YOU WANT TO SEE A NEW COMPANY FORM TO CONTINUE THE PRODUCT LINE OF KEISLER ENGINEERING AND HELP CUSTOMERS GET THEIR ORDERS FILLED, then skip down to the next section now.



While we wait to see the outcome of the KE Operation Asset Sale, some of you may be seeking to purchase a Keisler transmission kit. In Dec 2013, I sold the Keisler PerfectFit TKO 5-speed and T56 6-speed kit lines to Craig Liberty at Liberty Gear, please contact:



Liberty's High Performance Products, Inc.
6390 Pelham Road
Taylor, Michigan 48180
Phone (313) 278-4040
Fax (313) 381-2411
www.libertysgears.com

Tremec ELITE Distributor



I will update everyone just as soon as possible with more developments.



ALL INQUIRIES ABOUT KEISLER PRODUCT OR TECHNICAL SUPPORT SHOULD BE DIRECTED TO ME. EMAIL REPLIES WILL BE SLOW AT THIS TIME. THE PHONES ARE NOT BEING MANNED AT THIS TIME. THE WEB REQUEST FOR QUOTE PAGE IS CURRENTLY NON-OPERATIONAL SINCE DEC 17 2013 AND WILL NOT BE FIXED AT THIS TIME. I am the only one manning the company at this time (with no compensation) until Trustee John Newton can implement more help. You may reach Mr. Newton at the following:

John Newton, Trustee for KE Inc Case 14-30100

Mayer and Newton

1111 N Northshore Dr, Knoxville, TN 37919
(865) 588-5111 ** do not call; email him only **

johnnewton@mayerandnewton.com



Again, I am sorry to bring this news and that I could not do a better job to maintain the KE Inc in operation. But, as you read my lengthy posts on Facebook, you will understand that closure of the company to move forward was in the best interest of everyone.



Happy Motoring,



Shafi Keisler, Pres/CEO shafi.keisler@keislerauto.com

Keisler Engineering, Inc.

*** EMAIL ONLY PLEASE - NO PHONE CALLS AT THIS TIME **

Celebrating 22 Years of Innovation 1991 - 2014 Jan 15



Proposal for New Company Co-Operative Ownership by the Customers, Vendors & Management



Today I presented to Trustee John Newton a concept to gather buyers for the entire Keisler Engineering Operation Assets. He was agreeable for me to pitch this to you with the understanding that THIS BUYER GROUP APPROACH IS STRICTLY A PRIVATE TRANSACTION AND NOT AFFILIATED WITH THE TRUSTEE OR THE BANKRUPTCY PROTECTIONS PROVIDED TO CREDITORS. So here is the concept for your consideration:



A new Limited Liability Corporation company is formed with the sole purpose to purchase, own and operate the entire Keisler Engineering operation. Mission is to provide the performance aftermarket with class leading 5 & 6-Speed transmissions. Included in this mission is to fulfill the outstanding open orders of ALL Customer Creditors over a period of time, or a cash settlement over time for ALL Customers Creditors of Keisler Engineering Inc. Cancelled orders and refunds are not part of the outstanding open orders. At the time of closure, the cost for KE Inc to complete ALL Customer Creditor open orders including backorders, was approximately $476,399 for materials plus the direct labor and overhead to assemble, test, pack and ship.



To make this work, the new LLC shall be formed with Stock Shares types as defined below. Money to purchase the KE Operation Assets shall be raised from a portion of the sale of Preferred type Stock Shares. Monies raised shall be kept in an Escrow Account and not released until the court approves purchase of KE Operation Assets by the new LLC. The purchase amount for KE Operation Assets is unknown but must be the highest offer submitted to Trustee John Newton. There is no guarantee the new LLC would be able to make the highest offer; any other potential buyer group may ultimately outbid the new LLC group which would result in the escrowed funds being returned to every purchaser of Preferred type Stock Shares.



Assuming the new LLC can make the highest offer and purchase the assets, the funds from Escrow will be released into the new LLC, and the purchase will be made, and at some point shortly thereafter Creditors of KE Inc will receive their distribution of this money pro-rata.



The first order of business for the new LLC is to create the cash flow projections and determine how much additional working capital, if any, will be required. Additional working capital may come from the sale of more Preferred Stock Shares (best way, no debt), or a working line of capital from a bank loan or private lending source. Once the required amount of working capital is funded, execution of start up shall begin. From my experience, the new LLC can be started up with a minimum of full time personnel - just myself (Shafi Keisler), one (1) straight commission technical salesman, one (1) customer service/shipping and two (2) production associates. The remainder of staffing (additional production plus financial, purchasing, engineering) would be part time contractors until the sales and work load requires full time support.



The Product Line would be streamlined into the following:

1.PerfectFit Tremec TKO & T56 transmissions enhanced by Liberty Gear for superior shift quality of Keisler's previous Tremec offering. Liberty Gear is a Tremec Elite Distributor and they invested several hundred thousand dollars in 2013 to purchase the Keisler PerfectFit designs, inventory and equipment in an effort to maintain supply of the product to the market. Craig Liberty, the owner, has offered to DONATE all of his inventory at KE to the new LLC and allow all of the equipment he purchased to remain in place as his further Good Will to help all of us affect a start up under my leadership.


2.Rallye Sport, Super Sport - these current product lines will run until the tool up of the brand new replacement 5 & 6-Speed versions in-process are complete and into production. My chief engineer at KE, Dick McCord, and I have completed the all new SS 5-speed design (not to be confused with Legend Gear & Transmission LGT-700; not the same product). And the SS 6-speed version needs approximately 6 months of preparation to complete design and validation testing. These new designs take the current RS & SS technology to the next level for features, fit and torque capacity. The best gear manufacturer I have experience with resides in Detroit, and they have offered to tool up the entire gearset for the 5 & 6-speed product lines and hold the inventory at their expense. This is a tremendous offering from this supplier, who has a near perfect performance record for quality and delivery AND whose price is less than any other US manufacturer I have used to date. Already, they have hundreds of gears on the shelf for this product line.


3.All the Accessories - from Hydraulic Clutch Kits, to Pedals, Shifter Handles, Knobs and much more. These proven accessories complement the transmission kit, and provide a bottom line profit and value that is unmatched in the industry.


Ownership in the new LLC will be represented by Stock Shares of three types:


•1) Preferred type stock shares - purchased with new money and may be privately traded with few restrictions. The price is $1 (one US dollar) per share.
•2) Customer Creditor type stock shares - non-traded shares that represent the final claim amount, less final distributions by the Trustee. As the new LLC fills the open orders of Customer Creditor or provides a cash settlement, the Customer Creditor Stock Shares are converted to Management Stock Shares until there is no remaining Customer Creditor Stock Shares. It is the goal of Management to fill all the open orders as soon as possible, and thereby increasing its ownership share in the company.
3) Management type stock shares - non-traded shares representing Shafi Keisler and company management. This would be established at a minority share position of to be determined. The Preferred Stock Share Holders and Customer Creditor Stock Share Holders in total would be the Majority Owners of the new LLC at the time of start-up.





A board of directors would be set up to provide oversight to the company. These would be selected from members of each Stock Share type - Preferred, Creditor and Management.



VALUATION of the new LLC

All monies raised thru sale of Preferred Stock Shares prior to operation start-up will determine the value of the new company. For example, if a total of 600,000 shares of Preferred Stock in new LLC are sold at $1 per share, for a total of $600,000, then the initial value of the company is $600,000.



PURCHASE of Preferred Stock Shares of the new LLC

The minimum level of investment for Customers is no less than three thousand dollars ($3000.00) for three thousand shares (3,000 shares). The minimum level of investment for Vendors is five thousand dollars ($5,000.00) for five thousand shares (5,000 shares).



SUMMARY

This new LLC company has the ability to start up quickly and build proven product by proven people but with much better management, financial stability and customer service. New sales will build profitability, of which a portion will be used to fill open customer orders of KE Inc at the time of its closing Jan 15.

The historical proven Cost of Goods including direct labor is approximately 60% which leaves a Gross Margin of approximately 40%. Sales would be approximately $4 million dollars or more in the first (1st) year, growing to $8 million dollars or more by the third (3rd) year. These sales projections are speculative estimates which match the actual sales revenues of KE Inc from 2007-2013. Given the fact that no other company has the highly engineered product line, brand recognition, customer base or supplier base, this new LLC could and should out perform Keisler Engineering Inc in every way, for any historical sales year - even the high mark when net profits were close to 1 Million dollars.



Please contact Shafi Keisler by email HERE (NewcoKeisler@gmail.com) if you wish to consider participation in the new go forward business opportunity. Numerous details will be cannot be covered in this announcement, and I am certain you will have questions.



Let's try to make this happen ... together!



Best Regards,
 
Jamie Passon is building and shipping out 5 speeds now...
 
could`nt of happend to a better person, Ol shaft-yee:finga:
forgive me Lord :prayer:

I wonder what caused this bankruptcy to happen. Spending too much of the profits on personal things? Not returning enough profits back to the company cash reserves? Production costs increase without a unit sale price increase? Using the company as collateral for equipment purchases? Using the company as collateral for personal purchases?It would be nice to look at the historical financial records to determine the amount of investment needed to return to a sustained profitability.
 
I wonder what caused this bankruptcy to happen.

Who knows, might be as simple as not enough volume. With many newer factory hot rods like the Mustangs which are already available, and many classics being sort of trailer queens, or guys like me who could never afford such a luxury, this just HAS to be a somewhat limited market.

And, as I've pointed out before, "There's more than one way to skin a cat."

Why you would want to is beyond me. Skin a cat, that is

startled-cat.jpg
 
Did anybody ever actually GET a Keisler transmission? Maybe that was the problem.
 
I have one. The shop said it was a pain to install, but it seems to work. Granted, it has only been in service, and very limited so far, since October, so it should work fine. I sent in an email to see what happens to warranty claims.

After the shop rebuilding my car recommended I buy the transmission from Keisler, he discovered other vendors that provide better customer service. Live and learn, I guess (the story of my project) :)
 
Plenty of the magizines got them, they all loved the company.......but in the real world, probally not so much

I did a huge amount of conversions with these kits. Were they a bolt in and go deal? NO. Some were closer than others, but anytime you do a conversions, there is going to be issues. Some cars are tougher than others.

I think the problems may have started when they started to build their own transmission instead of just modding the Tremec. I suspect that Tremec caught wind of it and cut him off. Just saying. It's only my opinion. And now that I'm not "in" the industry anymore, I don't care what anybody thinks of my opinion.
 
I wonder what caused this bankruptcy to happen. Spending too much of the profits on personal things? Not returning enough profits back to the company cash reserves? Production costs increase without a unit sale price increase? Using the company as collateral for equipment purchases? Using the company as collateral for personal purchases?It would be nice to look at the historical financial records to determine the amount of investment needed to return to a sustained profitability.
All I know is if they treated all their customers the way they treated me, that could be a big part of it and eventually catch up to them and bite em on the ***:bootysha:
 
It might have something to do with a transmission that is priced more than the car it is going in is worth.

To those that have one, I wonder what you will do when it breaks or needs parts. Back to the old pick-a-part option I guess.
 
"go forward option" sounds more like "not paying your debts" option.. Am I wrong?
 
I guess I'm one of the few people that actually bought one of the 5 speed kits. I had no problems during installation and have had no issues with the transmission or any related components. Keisler's customer service at the time was great, work was done promptly, and support was courteous and knowledgeable. I'm sorry to hear that many people didn't get the service I did. It's also a shame to see a company that offered a complete overdrive package for our cars go under. I have to say of all the modifications I've made to my car the 5 speed overdrive transmission was the greatest improvement. It gave me a higher 1st gear and a final drive of .63 to 1. I could run a 3.91 rear end gear and still cruise the interstate at 70 mph at 2400 rpm. Heck on a good day with a tail wind I might even experience double digit gas mileage...maybe. Lol!
 
That's downright hilarious. For what they cost, "seems to work" is one hell of a description.


It works fine now, I just meant I don't have any real operating time on it to know if it is reliable. One of the reasons I went this route was for the warranty, and it looks like that just went belly up on me. With the amount of cutting and modifying that had to be done to the car to get the perfect fit to fit, I am pretty much stuck with this type of transmission.
 
My name is Bruce Kepley, I'm sales manager for Legend Gear and Transmission...
The ss700 was nothing more than our LGT700 with a Keisler kit...
We own the design, drawings and all tooling for our transmission...
It is already designed for the "A" body and "E" body, working on the "B" body now...
Tested to 700 foot pounds and 7,000 rpm shift capability...
Test vehicle is an Ellenor colored Boss Mustang...delivery is and has always been 6-10 weeks...I'm a Mopar guy myself (have burn scars on wrist from changing hot plus on a 440), have been blessed to have owned 6 Hemi cars, all 4 speeds, sold my last one to Rick Hendrick 2 years ago...have a 79 Lil Red left...
We Mopar guys are a special breed...we love the pain of searching for "that" part and saving to buy/trade for it...you guys that paid for and did not receive product should be pissed...if it's any consolation we're owed about 80 times what you are...rest assured that we did not receive a dime of your deposits, had we done so you'd have had your parts...if you need service or want one of our trannys just call Jeff Spraker at Spraker Racing, Mooresville, NC...704-799-1300.

Bruce Kepley 704-907-6495
 
Typical reasons why businesses fail.


  • Lack of experience
  • Insufficient capital (money)
  • Poor location
  • Poor inventory management
  • Over-investment in fixed assets
  • Poor credit arrangement management
  • Personal use of business funds
  • Unexpected growth
  • Competition
  • Low Sales
Just from reading the mail, the highlighted areas are those that jump out at me as being problematic. Not knowing more about the situation, I can't comment on experience and possible misappropriation of funds.
 
Well on a side note Legend is still making their 700 trans, since it was their design anyway.
 
My interpretation from reading it was the 4 million spent to buy the Muncie transmission stuff. Seems he overpaid based on real sales volume after purchase. He now seeks to separate assets from the liabilities. Business can be very tricky. It can be difficult to keep a small but good thing going when financial "advisors" are constantly telling you that you have to expand to grow, grow to dominate a market, dominate a market to protect your market (sales) share. While it might work for Walmart it didn't seem to work here. One has to wonder is bigger always better? And sadly I've noticed a trend that small business' don't seem to be run anymore with the mindset of making a decent living as an alternative to working for somebody else, but rather as a vehicle pushed to provide the lifestyle of the rich and famous. It is this reason in my opinion that the small business failure rate is something like 80% in the first two years. That said, an opportunity for someone with a lot of spare cash and a willingness to risk it all for an unknown financial reward. Maybe Edelbrock, Inc. can absorb this brand like Mr. Gasket, Hurst, and others?
 
I hate to see a business go under, but never cared for the way that Shafi Keisler handled himself.

I've always wondered how many of these kits, total, 'he ever hoped to sell.

And this is why, for the most part, I build my cars with as much stock stuff as possible.
 
I have keisler SS 700 trans #246 with a complete auto to man conversion kit for my 67 cuda fb. I patiently waited two years and finally got the shipment. I'm 5 winters into my resto. I will be using a console with the 5 speed. When I put it in the shifter was back in the console ash tray. I had many conversations with them that the location was wrong. They even said that all the other A Body trans with the same location were working with no complaints and that mine cuda must be different that the rest. With pictures they were finally convinced that it was wrong and they paid to ship it back, machined and moved the shifter to where I needed it and shipped It back. They said that this location would be the new standard location. It took a lot of frustration but they made it right. I got one last missing part and my driveshaft just before the announcement of chapter 7. Other than being slow to supply they gave me what I wanted. I wont be able to comment on the trans for another 2 years but fingers crossed.
 
Everytime I've ever purchased an aftermarket "kit" of any sort, I've always found that the "kit" did not simply bolt in, no matter what BS the company selling or making said kits said. Then I worked for two separate aftermarket speed parts manufactures and worked 5 years at each company. Thats when I learned why the parts never fit without some sort of mods. Bottom line is, if you want to build hot rods or race cars, you will need engineering and fabrication skills or you will have to pay someone else to do them for you. Also learned to never ever spend money with any vendor who does not garantee the part is available and will ship on a specified date and to get it in writing or and email. I hate to say it but there are alot of shady vendors out there, one has to be very careful.
 
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