BRIDGEPORT, Conn. -- The financially ailing Wells-Benrus Corp., which owes $12 million to Remington Products owner Victor K. Kiam II, has received bankruptcy court approval to borrow another $50,000 from Kiam.
Wells-Benrus, which is based in Middlebury and once manufactured Benrus Watches in Ridgefield, said it would use the additional funds to meet its payroll and pension fund costs.
The company has operated since Jan. 24 under Chapter 11 of the federal bankruptcy code, which gives protection from creditors while a repayment plan is worked out to pay off debts.
In papers filed Tuesday in U.S. Bankruptcy Court in Bridgeport, Wells-Benrus listed total known assets of only $770 compared with debts of at least $14.2 million. In its original filing, the company listed assets of $1.9 million.
The company said in its motion to borrow more from Kiam that it is operating at a loss and running further into debt.
Wells-Benrus attempted in January to trade the $12 million it owes Kiam for 7.1 million new shares of stock. The deal would have relieved the firm from most of its debt service obligations, which it could not meet.
But a shareholder filed two lawsuits to block the debt-for-equity swap, charging the plan violated federal securities laws.
James Gershman of Stamford, who owns 6.2 percent of Wells-Benrus stock, said the transaction would have diluted his and all other shareholders' ownership in the company.
Wells-Benrus claims bankruptcy proceedings have been held up by Gershman's objection to the firm's motion to hire attorneys for the case.