Tuesday, April 15, 2014

Calumet Photographic bankruptcy update: There is hope for Calumet customers!

Calumet Photographic Logo, courtesy of Calumet Photographic
I've been reporting on Calumet Photographic's bankruptcy for some time now. For the first time, for at least some customers of the defunct company, there may good news about your store credits, and prepaid orders, however, don't jump for joy quite yet.

Let's review what's happened so far. On March 12th Calumet Photographic, the US based photography store chain filed for Chapter 7 Bankruptcy and closed all their US locations. The Calumet stores in the United Kingdom, and elsewhere in Europe, being financially separate entities from the US company, were unaffected by the US bankruptcy.

Many US Calumet customers, caught by surprise by the bankruptcy, were holding photography gear rented from the company, unable to return it, prepaid orders, and store credits.

With liabilities far exceeding assets, it has looked as though Calumet Photographic customers would recover very little, if anything at all.

Now, it appears as though Calumet Photographic Inc. has found a buyer for some of its assets.

According to court papers filed April 7, 2014 in Calumet’s bankruptcy case, a new company, CalPhotoUS LLC formed by former owners of Calumet Photographic, has offered $2,825,000 to acquire some, but not all inventory, store leases and other assets.

The inventory and leases are for former Calumet stores in Oak Brook, Illinois, Chicago (Goose Island), Illinois (Bliss Street and Cherry Street), Philadelphia, Pennsylvania, San Francisco, California and Washington, DC. (The Cambridge, Massachusetts store, may become part of this deal, however, specific contingencies as stated in the court papers must occur for that to happen.)
CalPhoto would also take responsibility for any liabilities related to the leases as well as the stores’ former employees.

Calumet had 14 stores in the United States. It is important to understand that the proposal is to open no more than about half their former stores. The employees affected by the acquisition are the ones only at the reopened locations.

That said, there appears to be a brighter picture for customers.

The court papers state,
“The APA also provides that the Purchaser will assume certain of the Debtors' liabilities including: …

(iv) all obligations of Seller and any of the Debtors to customers of the Business relating to customer deposits, product repairs, gift cards and warranty claims (the “Assumed Customer Liabilities.)”

In each of the preceding paragraphs (i), (ii), and (iii), it talks about liabilities arising only from assumed leases and contracts, of the acquisition, and in the case of employees, only at the locations listed above. In the paragraph (iv) quoted above, there is no similar qualification, so all Calumet store customers appear to be affected, not just the ones at the stores which are part of the acquisition.

At this time, however, it's very much up in the air, based on the court papers, what the acquisition means for customers of the Calumet Photographic webstore, though a liberal interpretation of the acquisition document could construe that webstore customers are including in the paragraph.

It would seem that Calumet Photographic creditors would accept this deal considering a liquidation would likely yield no more than $50,000 total or less.

This acquisition is still a proposal. While it is being recommended by the Bankruptcy Trustee, the Bankruptcy court has not yet accepted it, nor fleshed it out completely. Don't expect to go to any reopened store tomorrow, or cash in your store credit, or expect to see your prepaid order just yet.


John - Philadelphia said...

This is great news Ned. Hopefully it will come to fruition.

Harold - Chicago said...

Thanks for the update. I'm hoping for this as I have a store credit for more than $300.

George - SoCal said...

Hi Ned. Well my store in Santa Ana is apparently history, along with the others in SoCal. Hopefully, they'll honor my store credit anyway and I'll be able to use it online or by phone.

Ned S. Levi said...

George, I hope so too.

Zack - NY said...

Wow, the NY store is done. I thought that one would be one of the survivors. Hopefully I'll be able to use my credit in Philly.

Anonymous said...

I saw that the downtown Chicago store (Rush St) was open last week. They had signs up saying 10-40% off. Is that legal?

Ned S. Levi said...

Concerning the discounts offered at the Chicago Store which isn't reopening, why would offering a discount price be illegal. They are trying to sell everything there to pay off creditors. That often means selling assets at a discounted price.

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