January 28, 2008 / 8:31 PM / 13 years ago

Firetruck maker files for bankruptcy, blames IBM

CHICAGO (Reuters) - American LaFrance, a U.S. maker of firetrucks, ambulances and other emergency vehicles, filed for bankruptcy court protection on Monday, saying a botched software switch last summer involving IBM (IBM.N) crippled production and threw its finances into chaos.

In documents filed with a U.S. bankruptcy court in Wilmington, Delaware, privately held ALF, which was spun off from Daimler AG’s (DAIGn.DE) Freightliner unit in late 2005, blamed back-office computer issues associated with that sale for its current problems.

As part of the post-spinoff transition, Freightliner agreed to provide accounting, purchasing, inventory, production, payroll and finance services for ALF for about 18 months, while ALF, with the help of IBM, worked to set up a new, computer system to integrate those functions.

But according to documents filed with the bankruptcy court, when ALF switched the new system on in June “serious deficiencies” threw its operations into chaos and crippled production, creating a “liquidity crisis” that ultimately forced it to file for bankruptcy court protection.

ALF did not say who its software vendor was. But it said it was analyzing potential action against International Business Machines Corp “based upon services provided by IBM in connection with the problem-riddled transition to the ERP system.”

Fred McNeese, director of IBM’s corporate media relations, said his company was reviewing the filing and declined to comment on its relationship with ALF.

ALF’s problems were not confined to computers. In an affidavit supporting the company’s first-day motions with the bankruptcy court, William Snyder, a financial adviser to ALF and its proposed chief restructuring officer, said ALF had “experienced significant financial losses” and shrinking sales in its two years as a stand-alone company.

Snyder said ALF had lost $56 million in 2007 on sales of “less than $195 million” after losing $48 million on sales of $233 million in 2006.

Founded in 1832, Summerville, South Carolina-based ALF is one of the top six providers of emergency equipment in North America. Its rivals include Oshkosh Truck Corp (OSK.N).

Editing by Andre Grenon

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