IRVINE, CA -- Star Trac, which earlier this month said it would not file for bankruptcy, announced today that it has entered into an Assignment for the Benefit of Creditors (ABC) in accordance with California law, effective immediately.

The Irvine, CA-based manufacturer said in a statement that all assets of Unisen Inc., the parent company of Star Trac, will immediately be transferred to a new corporate entity, Core Industries Inc. By entering into an ABC, Star Trac says it will develop a strategic plan to monetize the assets for the benefit of creditors and to improve Star Trac’s balance sheet to create a healthy company going forward.

An ABC is a common law business liquidation mechanism that is an alternative to a formal Chapter 11 or Chapter 7 bankruptcy proceeding. The ABC proceeding is governed by state law rather than federal bankruptcy law.

Michael Bruno, owner of Land America Health and Fitness Co., Xiamen, China, purchased Star Trac on July 6. Since then, Star Trac had been in negotiations with vendors to restructure outstanding payables, but the company said this process made entering into an ABC unavoidable.

“Despite the infusion of capital from the investment by Michael Bruno, our company could not reduce its payables adequately through direct settlement negotiations with our vendors,” Mike Leveque, president and COO of Star Trac, said in a statement. “We take this process as an integral step towards repositioning the organization for long-term success. Our entire leadership team is committed to increasing our ability to provide the product innovation, quality, reliability and customer service that have been the Star Trac brand legacy since 1988. We are determined to emerge as a stable company that will be better positioned to take care of our customers.”

Management will remain the same, according to a statement from Star Trac. All purchase orders that have been placed with Star Trac will transfer to the new company and will be honored at the terms of the original order, the company said in the press release.

“There will be no lag time on new orders, and we are quoting and fulfilling product at standard lead times,” a Star Trac spokesperson told Club Industry.

All warranties for product in the field will be honored by the new company, Star Trac’s statement said.

NEXT PAGE: INDUSTRY RESPONSE TO THE FILING

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