STAYTON, OR—Mastercraft Furniture Inc. filed for Chapter 7 bankruptcy Monday. The upholstery manufacturer blamed a dispute with a glue vendor for the filing.

The Stayton furniture maker lists $516,000 in assets and $6.8 million in liabilities in the filing.

In 2012 Mastercraft announced an agreement with Swedish Furniture retailer Ikea to great fanfare and moved its manufacturing within Oregon from Wilsonville to Stayton while quadrupling its payroll to 158 workers.

Oregon's Governor at the time John Kitzhaber called Mastercraft "a perfect example of an Oregon company 'insourcing.'"

In a lawsuit still pending since August, Mastercraft sued a vendor, Michigan-based SABA North America, saying the glue it supplied didn't meet Ikea's standards. Mastercraft said in a court filing that Ikea rejected a shipment and canceled all future orders for furniture after it found that glue in the products tested positive for a banned chemical.

This makes Ikea one of Mastercraft's biggest creditors, with a claim of $2.96 million.

In a statement, Mastercraft owner Marty Olson said: "We have been particularly proud to show that U.S. manufacturers can be competitive with overseas producers. Mastercraft has provided good jobs to the people of Stayton and the surrounding area, and we are devastated that the business we have worked so hard to build has to close its doors."