For El Segundo bioresin maker Cereplast Inc., the last few months have been a near-death experience. Due to the Eurozone crisis, two distributors failed to pay Cereplast $8.6 million for their clients’ orders. It was a huge blow to a company with only $20 million in revenue last year.

But last week, Cereplast, which makes plasticlike resin from plant material, appeared to find a savior – from India. The company reached an agreement with Singularis Solutions Pvt. Ltd. of Bangalore to take the resins off the European distributors’ hands and sell them to 15 companies in India. More importantly, Singularis promised to provide a letter of credit to Cereplast by May 30, repaying the $8.6 million.

Long-suffering investors greeted the news joyously, sending Cereplast shares up 18 percent to 58 cents last Monday.

But less than 48 hours later, shares gave up all this gain as Cereplast released first quarter earnings, and investors and analysts got their first look at just how bad the damage was from the billing fiasco.

Cereplast, whose resins are used to make a kind of new-age plastic that’s biodegradable, essentially had stopped production at its manufacturing plant in Seymour, Ind. It also ceased product sales during the first quarter, focusing all its energy on working out a deal to get its accounts receivable paid. Revenue plunged 98 percent to a mere $103,000, resulting in a net loss of $2.4 million.

“It’s pretty evident from these results here that you have shut down,” said Steven Hart, an analyst from Forefront Capital Management LLC in New York during the company’s earnings conference call. “You are really not producing anything in Indiana.”

Frederic Scheer, Cereplast’s chief executive, told the Business Journal last week that he hopes the company will get back on track during the second half of the year.

“I’m disappointed that we’ve spent the last six months chasing receivables instead of growing our business,” he said. “We’re hopeful we can completely resolve the accounts receivable situation by midyear and focus in the second half of the year on growth.”

Scheer said the problems began last summer when credit froze throughout much of Europe due to the debt crisis. Cereplast earlier in the year signed deals with two major distributors – one in Germany and one in Italy – and had delivered 4,000 tons of its plant-based resins – worth $8.6 million – to those two distributors, which he declined to name.

But customers lined up by those distributors had apparently backed out. The distributors in turn reneged on their agreement to pay the $8.6 million they owed to Cereplast.

What’s more, in its earnings presentation to investors last week, the company revealed that an additional $6 million in receivables was still outstanding with an undisclosed number of other customers. That means the company did not receive payment on at least $14 million of its $20 million in sales last year.

Scheer said Cereplast first tried to talk to managers at the two distributors and then sent threatening letters. But he said Cereplast decided against taking legal action because of the time and expense that would involve.

“We believed it made more sense for us to try to find another buyer for the bioresins rather than have the material locked up for years while the legal wrangling went on,” he said.

So the company started hunting for a buyer outside Europe. Scheer said that because the staff at Cereplast is so small (46 total employees, including those at the Seymour manufacturing plant), all management and sales personnel were pulled off their usual assignments and joined in the hunt for another buyer for the stranded inventory.

Scheer said it took four months to reach an agreement with Singularis in Bangalore.

“We went and visited each of the 15 client companies in India that Singularis said it had lined up for sales and ascertained for ourselves whether those clients appeared willing and able to pay for the resins,” Scheer said. “This is something we never even thought of doing before our experience in Europe. We just took the word of the distributors.”

While it would appear Cereplast will get paid for the $8.6 million worth of resins it sold last year to those European distributors, the $6 million in other receivables remains outstanding. Scheer told analysts last week that the company has retained legal counsel to go after the unpaid bills.

In the longer term, Cereplast faces a more fundamental problem: The market for its plant-based resins as substitutes for banned plastic grocery bags and polystyrene packaging has turned out less robust than expected.

In Europe – especially Italy, which has been the most active in terms of passing bans – enforcement of those bans has dropped off sharply as the economy has plunged into recession.

In the United States, bans on plastic bags or polystyrene containers are being debated in many cities including Los Angeles. But Scheer said bags and containers containing plant-based resins are not being put forward as viable alternatives. In place of plastic bags, for example, grocery stores are turning to paper or cloth bags.

So the company is faced with the challenge of developing other markets. That’s where the company’s recent experience might be an asset.

“Because of our intense search for a company to take over the accounts receivable,” Scheer said, “we now have lots of new sales leads to explore for direct sales of our products.”

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