L.A. retail liquidators are booming as others go bust. (Up Front).When McCrory Corp., one of the country's last five-and-dime store chains, decided to close 200 of its stores earlier this year following a bankruptcy filing, it turned to the Buxbaum Group. Three months later, Buxbaum had orchestrated or·ches·trate tr.v. or·ches·trat·ed, or·ches·trat·ing, or·ches·trates 1. To compose or arrange (music) for performance by an orchestra. 2. a going-out-of-business sale Noun 1. going-out-of-business sale - a sale of all the tangible assets of a business that is about to close; "during the Great Depression going-out-of-business sales were very common" , selling $54 million worth of knickknacks to bargain-hungry customers for $29 million. The end result was that Pennsylvania-based McCrory was able to turn its inventory into cash, close its stores and return to bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. to pay off some of its secured lenders. Buxbaum is one of the nation's seven major retail liquidators, three of them in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , being called upon in recent months by a growing list of chain stores either filing for bankruptcy or closing their doors. Business is so good for Buxbaum that it recently moved from Encino to Calabasas, nearly doubling its office space. "We needed more space to grow," said Paul Buxbaum, president and chief executive of the company founded in 1973. "Our staff has grown by one-third in the last 14 months." Other local companies include The Nassi Group in Westlake Village and Great American Group in Woodland Hills. When Krause's Furniture Inc. decided to close 88 of its stores last fall following a bankruptcy filing in July, it also turned to Buxbaum to liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the its merchandise. Buxbaum staged a sale in eight states, selling $40 million worth of couches, chairs, and coffee tables for $17 million. Growing troubled list This small group of retail liquidators come into bankruptcy court, make a bid for a company's inventory, purchase it, and then quickly sell it to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. their costs. They also estimate the value of inventory when retailers are trying to restructure or negotiate an asset-based loan An asset-based loan is a loan, often for a short term, secured by a company's assets. Real estate, A/R, inventory, and equipment are typical assets used to back the loan. The loan may be backed by a single category of assets or some combination of assets, for instance, a . Retail liquidators have worked with Orange County-based House 2 Home to close its stores. Other chains that shuttered shut·ter n. 1. One that shuts, as: a. A hinged cover or screen for a window, usually fitted with louvers. b. their doors include HomeLife Corp., a furniture store once owned by Sears, Roebuck & Co., which closed all 130 of its stores, kitchenware retailer Lechters Inc., which closed more than 240 stores, Montgomery Ward, which closed 250 stores, and Kmart Corp., which closed 283 stores as part of its bankruptcy filing. The rapid decline in these chains has boosted revenues for the Buxbaum Group and the six other major liquidators by between 10 and 20 percent in the last year. In 2001, industry analysts estimate that the "Magnificent Seven" disposed of $6 billion in inventory. Competition among the seven is high. But often times when a retailer needs to quickly get cash for its inventory, two or three of the companies will work together. Nassi Group and Great American Group won the bid this year to close out more than 40 stores operated by Casual Male Corp., which filed for Chapter 11 bankruptcy protection in early 2001 and was sold to outlet retailer Design in May this year. All seven worked together to quickly close the 283 Kmart stores the chain needed to shutter (1) An opaque window that is moved in one direction to let light in and in another to close off the light. In fixed-lens cameras, one shutter often suffices for aperture and speed. to restructure its finances. However, once finished with a deal, the companies are back jostling for the same accounts, going into bankruptcy court to outbid out·bid tr.v. out·bid, out·bid·den or out·bid, out·bid·ding, out·bids To bid higher than: We outbid our rivals at the auction. each other by pennies on the dollar. "It is pretty cutthorat," admitted Rick Briggs, senior vice president of Nassi Group. "This industry has a great deal of operational risk because we are moving tremendous amounts of inventories through a short period of time. You lose a day, it's significant." Industry secrets It's so competitive that the liquidators don't like to divulge their revenues, their staffing numbers or the accounts they are working on. They will say that business is very cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. , like the retail industry. Liquidators are busiest during the first and last part of the year. That's because if retailers can make it through the summer, they have a better shot of hanging on during the lucrative back-to-school and holiday season. Great American Group weathers the slowdown with a wholesale industrial division active all year auctioning distribution facilities and Industrial equipment. "The wholesale industrial division is doing brisk Brisk as a proper name may refer to:
"Our business," Gumaer said, "is going to do quite well over the next couple of years." |
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