Strouds creditors want answers
June 2, 2003-- Home Textiles Today,
In their second meeting since Strouds filed bankruptcy nearly two weeks ago, members of the retailer's creditors' committee hired an attorney and a forensic accountant, even as the 47-store chain continued its liquidation.
"I think the accountant wants to jump into it fast, just to be sure everything's proper" with the liquidation, said Dale Talbert, vp, sales and merchandising for Veratex, Strouds' second-largest unsecured creditor after Hollander Home Fashions.
Friday's meeting, teleconferenced with the U.S. Trustee and creditors' committee members around the country, lasted several hours as attorneys and accountants were interviewed. Also at the session, Jeff Hollander, president and coo of Hollander, and Will Bartelmo, director of credit, asst. treasurer for Springs Industries, were confirmed as co-chairs of the committee of unsecured creditors.
"We basically interviewed the lawyers and accountants over the phone," Talbert explained. "I think they were all experienced and savvy enough to look into this."
The committee selected the Newport Beach, CA law firm of Buchalter Namer Fields & Younger as counsel. Lead attorney Jeffery Garfinkle has also been involved in such well-known bankruptcies as Phar Mor, Breunner Home Furnishing of San Francisco and Buffams, a southern California retailer in the 1990s.
BDO Seidman, forensic accountants, will be auditors, led by partner Bill Lenhart from the firm's Los Angeles office. BDO has prior experience with Filene's, Home Express and the Montgomery Ward bankruptcies, according to Hollander.
"They will investigate various potential causes for action," Hollander explained following the meeting.
Creditors are suspicious of the circumstances surrounding the Strouds bankruptcy, particularly because it came so quickly following a voluntary restructuring the of the merchant's trade debt and a refinancing package. The two part deal apparently unraveled when additional equity financing failed to materialize and the secured lenders called the loans and declared a default. The bankruptcy filing with approval to liquidate followed quickly.
"I think that happened awfully fast," Talbert opined in a telephone interview Friday. "But these [accountants] know how to go in an look for that kind of stuff. I think they're used to doing this kind of dirty work. I don't know if any of us will ever see anything from this — I kind of think we won't — but the process has to take place."
The Strouds' creditors' committee is composed of six companies: Hollander, Veratex, Springs, Enmark Trading, Pillowtex and Glendale Fashion Associates.