The move did not surprise analysts, as Electroglas has been spilling red ink and struggled for years.

The current plan is for certain bondholders to provide debtor in possession financing to sustain Electroglas during the bankruptcy process and for it to conduct an auction to sell the company. The company expects to continue essential operations, including sales, product support, service and warranty programs.

Electroglas has been hit hard by the downturn. More recently, the company has implemented work force reductions, salary cuts, mandatory time off for all of the company's employees and significant decreases in non-labor expenses.

At the same time, the company has been working with Needham & Co. LLC and others to review and pursue financial and strategic options for the company to maximize value on behalf of all of the company's stakeholders, including merging with or into another company, and a sale of all or substantially all of the company's assets.

Other fab tool vendors are also suffering. Earlier this year, Japan's S.E.S. Co. Ltd. filed for bankruptcy protection under a rehabilitation law with 14.27 billion yen ($158.4 million) in liabilities.

Another fab tool supplier, Asyst Technologies Inc., also filed for Chapter 11 in recent times.

Aviza Technology Inc. and its subsidiaries, Aviza Inc. and Trikon Technologies Inc., recently filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. Aviza also executed a nonbinding letter of intent to sell certain of its assets and businesses to Japan's Sumitomo Precision Products Co. Ltd. (SPP).

Tegal Corp. recently retained the services of Cowen and Co. LLC to explore its strategic alternatives, including the potential sale of the struggling fab tool vendor.