Top 40 supplier Tekweld (asi/90807) has taken over the marketing, selling and customer service responsibilities of Pioneer Balloon Company’s (asi/78200) line of products within the U.S. promotional products industry.

Word on the licensing agreement, which went into effect Monday, Oct. 9, comes nearly two weeks after Pioneer announced it was filing for Chapter 11 bankruptcy.

Tekweld CEO Scott Slade told ASI Media that the bankruptcy filing doesn’t impact the deal. Pioneer is continuing to operate and will act as the manufacturer of balloons, which Tekweld will be selling and marketing in the promo space. “The orders will come through us and Pioneer will continue to make the product,” said Slade.

Typically, Chapter 11 works as a reorganization bankruptcy in which businesses are allowed to maintain day-to-day operations while creating a plan to repay creditors.

In Chapter 11, a plan of reorganization is proposed and creditors whose rights are affected may vote on the plan. The plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.

The Licensing Agreement

Under the deal, Pioneer will continue to produce and print the balloons sold by Tekweld in promo. Meanwhile, Pioneer will handle the manufacturing and distribution of balloons through its other sales channels. Slade noted that AdRite and Qualatex latex and Qualatex Microfoil balloons are among the offerings Tekweld will now provide to promo.

“We are truly excited to be part of this great partnership with Pioneer Line powered by Tekweld,” said Daniel A. Flynn, CEO of Pioneer Balloon Company. “This team will ensure the highest quality products and service to our promotional products distributors.”

The agreement came together with the help of industry veteran Ray Rodriguez, a former Tekweld vice president of sales and marketing who recently launched 5P Promo, a supplier representative/consulting firm. “I’m truly excited about bringing these two premier lines together to form a strong sales and marketing one-two punch,” Rodriguez said.

In addition to the arrangement regarding balloons, the licensing agreement has enabled Tekweld to form what Slade described as a factory-direct relationship that will empower the Top 40 firm to sell banners, flags, tents, table covers, pop-up walls and more.

“We can now improve the customer experience by also offering (these additional products) our customers need, not only for indoor and outdoor events but advertising at car dealerships, festivals and more,” Slade said in a statement.

Based on reported 2022 North American promo product revenue of $49.5 million, Tekweld ranked 38^th on Counselor’s most recent list of the largest suppliers in the industry.

The Bankruptcy

Headquartered in Kansas, Pioneer Balloon has been in business since 1917 – 106 years. It has manufacturing facilities in three North American countries and sells domestically and internationally, with buyers beyond promo including the décor, entertaining and retail markets.

Still, the firm has fallen on hard times of late, according to a Sept. 29 letter from Flynn to customers. The company found it difficult to bounce back from disruptions caused by COVID-19 lockdowns, struggling to produce enough product to meet customers’ needs, the CEO said.

After evaluating various alternatives, Pioneer felt that Chapter 11 bankruptcy was the best option.

“We have reached a point when we must focus our energy and resources on the future of Pioneer instead of struggling with the challenges of the past,” Flynn told customers. “We plan to do this through a Chapter 11 reorganization.”

“We have reached a point when we must focus our energy and resources on the future of Pioneer instead of struggling with the challenges of the past.” Daniel Flynn, Pioneer Balloon Company

Flynn said Pioneer plans to continue to operate as normal, while intending to pay back creditors. He noted that Pioneer’s affiliates in Australia, Brazil, Canada, Mexico and the United Kingdom are not part of the bankruptcy filing. The bankruptcy, he believes, will ultimately benefit the company and its customers.

“Although this is a complex procedure and one new to us, we are working with a team of seasoned professionals to ensure the process goes as smoothly as possible,” Flynn said. “We know this news may be surprising and worrisome to you, but please know we expect to continue manufacturing and providing you with Qualatex balloons as steadily as possible. Further, this process should help us accelerate the process of filling out the line with sizes and colors that are currently backordered.”

Pioneer Balloon Company formally filed for Chapter 11 in federal bankruptcy court in Kansas in late September. In a Sept. 27 court filing in the case, one creditor, White Oak Commercial Finance LLC, said that Pioneer is poised to lose $3 million over the next 13 weeks.