Choire Sicha: March 2009 Archives

When local governments act like corporations, what happens? Jefferson County, Alabama, for one, home to Birmingham, is billions of dollars in debt.

Two commissioners in Jefferson County are pressing the county to file for bankruptcy court protection, as the county grapples with about $4 billion in debt related to a controversial series of bond transactions earlier in the decade.

This is a strange one. Dial-a-Mattress, infamous for their late-night commercials, saw sales fall to $100 million, from $170 million two years ago, and now:

Creditors filed an involuntary Chapter 7 bankruptcy petition against Dial-a-Mattress last week, seeking $1.7 million. The company is seeking to convert that to a Chapter 11 reorganization.

Sleepy's said in a statement on Tuesday that it would provide debtor-in-possession financing to help Dial-a-Mattress operate. The financing is subject to bankruptcy court approval.

Meadowbrook Farms, a cooperative of more than 200 family hog farm members who used a central processing plant in Illinois, has filed for chapter 7 bankruptcy. The cooperative owed its members money, having had a cash crunch shortfall because of a large default by a purchaser.

Barnes and Noble may be cutting hours of stores in order to keep doors open, but Borders, about to announce its 4th quarter of '08 numbers, has another plan, to be revealed next week. We're thinking "slash and burn" is the plan. Its stock is trading at 69 cents. It had terrible holiday numbers. And:

Borders also is expected to ask shareholders to approve a reverse stock split at its annual meeting on May 21 to use if necessary to push the share price above $1 and avoid delisting.

Here's a fascinating side effect of bankruptcy filings--we get to learn the semi-interesting names of creditors. From North Carolina:

Raleigh's Carolina Wine Co. left vino lovers across the country with empty glasses when it suddenly shut down this year.

But the company's bankruptcy filing reveals that it had widespread and, in some cases, famous clients.

So very, very, very, very many—and all fascinating stories, these are just a few of the going-out-of-business plans of mom-and-pop stores:

De Jong's Furniture of Brantford, Ontario.
Music City Gourmet of Nashville, TN.
Objets Trouvé of New Orleans, LA.

This is intriguing: a number of malls nationwide are cutting hours, instead of closing stores. Barnes and Noble is changing hours across the country. "General Growth, which is trying to avoid filing for bankruptcy protection, is changing the hours at many of its malls across the country, including Baltimore-area locations White Marsh Mall, Owings Mills Mall, Towson Town Center, Mondawmin Mall and The Mall in Columbia. The malls will close a half-hour earlier Monday through Thursday and close an hour earlier Friday and Saturday. On Sunday, the malls will open an hour later."

Famed luxury goods purveyor Tiffany might look immune to the recession but actually they are in a world of trouble. "Net income fell to $31.1 million, or 25 cents per share, down from $127.4 million," for one thing; these costs are associated with store closing and with layoffs. So what's Tiffany's solution? More layoffs! "Tiffany plans to offer early retirement packages to 800 of its employees in the U.S., and cut 10% of its staff worldwide." Great plan.

You may not have expected to see the recession come to Reno and Vegas, and yet! Herbst Gaming will lose control of its 15 casinos in Nevada, Iowa and Missouri in its new bankruptcy filing; the company blames its expensive expansion in the Nevada market in 2007. And extremely troubled Progressive Gaming, which at one time provided gaming systems for casinos, filed for liquidation this week.

What does all this timely demising and store shuttering and bankrupty look like in the real world of strip-malled avenues? Northeast Ohio's retail spaces now have a 10.3% vacancy rate, an all-time high—and very little of that is due to new construction:

"There is no retail demand from large tenants who want new locations, and developers have problems getting loans for new projects," [CBRE broker Thomas] Flynn said. "Both the demand and supply side (of retail development) are stalled."

Few prospective tenants are around to eat into the vacant space. Only a handful of value-oriented stores, such as Family Dollar and Dollar General, as well as auto parts retailers, are expanding, CB said in its report.

The 129 Boater's World stores in 27 U.S. states are being shuttered. Parent company Ritz Camera Centers Inc. (who knew?) filed for bankruptcy protection last month, and is attempting to raise cash by liquidating the boat stores' inventory. The company will also close 400 of its 800 camera stores.

The Greenbrier Resort in West Virginia, host to every U.S. President since Eisenhower, has endured speculation about a purchaser for some time, as it lost $35 million last year alone. The enormous facility—720 rooms! A 40,000-square-foot spa!—filed for bankruptcy last week and, pending approval, will be "bought" by Marriott, and by "bought" they mean that the current owner, railway giant CSX, will pay Marriott $50 million to operate it in exchange for not much more money than that. Unless that deal goes south. (Get it? South?)