In what could be seen as a referendum on the postal industry from the internet age, National Envelope is beginning the process of filing for Chapter 11 bankruptcy protection – again. This is the second time the largest envelope company in America will have filed for bankruptcy in three years. As the global reliance on the internet continues to exponentially grow, the decline in mail usage has been radical. Despite cutting costs and streamlining their workflow processes, National Envelope began piling debt it couldn’t dig out of.
Debt Problems Continue for National Envelope
With the help of their bankruptcy attorney, National Envelope hopes to lick its debt problems. But as significant interest in the internet continues to blossom, it is uncertain if the mail industry will ever look the same. To alleviate their debt, National Envelope is expected to seek $67.5 million in bankruptcy financing with the help of their bankruptcy attorney. Under the Chapter 11 filing, National Envelope would still be able to continue business as usual.
As the largest maker of envelopes in the United States, National Envelope creates approximately 37 billion envelopes every year. With inflation and market price increases off the heals of the 2008 recession, National Envelope has had to make many structural changes to offset their debt challenges. Since 2001, National Envelope has experienced a 3-4 percent demand decline each year. As demand continued decreasing and costs steadily rose, National Envelope’s debt problem first came to a head in 2010, when they also filed for Chapter 11 bankruptcy protection.
While National Envelope has certainly struggled with debt as the internet continues its historic boom, they haven’t been the only victims in the industry. The United States Postal Service noted almost $2 billion in losses during Q1 of 2013 alone.
Aside from their Chapter 11 filing, National Envelope is still looking for practical ways to reduce and prevent future debt. Continued efforts of restructuring coupled with cutting costs at their plant have done little to cut their debt, but National Envelope intends to use the Chapter 11 filing as an opportunity to re-evaluate their practice and move forward.