HALO INDUSTRIES FILES FOR CHAPTER 11

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CHICAGO (AdAge.com) -- Promotional products company Halo Industries, Niles, Ill., filed for Chapter 11 today, seeking protection for its U.S. core promotional products business and its Lee Wayne subsidiary.

The filing, made in U.S. Bankruptcy Court in Wilmington, Del., excludes Halo's marketing services agency Upshot, Chicago, as well as its Canadian and European divisions, Premier Promotions and Halo Sports.

"The reason Upshot was not included in the filing is that it's its own separate entity; it operates on its own and is financially viable," a spokeswoman said.

Halo is seeking to restructure debt following a series of non-operating issues including the lease on its headquarters and last year's purchase of Starbelly.com, which "was one of the acquisitions that led to excessive cost by the company," said the spokeswoman, who added that Halo also secured $30 million in additional funding from its current lenders.

Today's filing included motions to continue business as usual, including paying employee wages and vendor fees. The company expects a ruling Wednesday to determine what happens next.

In February, Halo brought on new CEO Marc Simon to help restore the company's profitability. Since that time, Halo has reduced overhead through layoffs as well as the sale of two marketing services units -- Lipson, Alport, Glass & Associates for $25 million and Market USA for $32.5 million. The company hoped the sale of the two divisions would help it recover from a financially troubling 2000 and renew its focus on its core promotional products unit, Halo Branded Solutions.

The spokeswoman maintains there are no immediate plans to sell Upshot.

Halo reported a 19% decrease in first-quarter net sales, to $97.7 million from $120.9 million in the year-earlier period. Net losses applicable to shareholders rose 498% to $27.5 million in the first quarter, from $4.6 million last year.

Trading of Halo shares, which reached a new 52-week low July 26 of 15 cents, was halted today after the Chapter 11 filing.

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