Glickman’s Bankruptcy: The Grand Style Unravels
Mike Glickman’s 30th birthday party in March was a typical display of Glickman extravagance. About 500 people turned out at his newly remodeled Encino estate to munch prime rib, pizza and tacos while a rap band pounded out loud music.
“It was a classic Hollywood extravaganza,” recalled Jerry Berns, former director of Glickman’s new homes division.
The party was in part a celebration of Glickman’s achievements. In just a few years he had built Mike Glickman Realty into the San Fernando Valley’s largest residential brokerage firm and had earned a reputation for aggressive marketing, creative promotions and inspirational speeches.
Even as he toasted himself, however, things were unraveling for Glickman. His business was locked in a downward spiral that culminated in his filing Tuesday for bankruptcy liquidation.
While he was on a roll, Mike Glickman epitomized the get-it-now style of the best-known entrepreneurs of the 1980s, just as his collapse seems to symbolize the bills that have started coming due in the 1990s.
In a classic Glickman gesture in 1987, he announced his expansion from the Valley into Los Angeles’ Westside by opening a 10,000-square-foot office in Brentwood. He soon announced plans for an another king-sized office in Beverly Hills.
“Whatever the competition was doing at every level, he would spend more,” said Rick Merrill, president of Prudential California Realty’s central region, which includes the Valley.
Indeed, many of Glickman’s agents, who were cleaning out their desks at the Woodland Hills headquarters Tuesday, told tales of celebrity treatment by their young employer.
An army of valets would park the agents’ Mercedes and Cadillacs when they arrived at work. A balloon bouquet arrived at the house of every agent celebrating a birthday. Once a week, the agents were treated to a catered lunch. The tab to rotate the huge flower bouquets that graced all the offices was $25,000 every three months, according to one broker.
There were also the unpredictable perks. Glickman would sometimes announce to the troops that it was too hot to work. He’d invite everyone to a theater he had rented for a movie matinee. He’d also steer business to his agents, his employees said. Rather than personally list houses for clients, he would draw name cards out of a hat and give away the listings.
Some expenses were legend. During a recent month, an employee ran up a $28,000 bill calling one number in Israel, brokers said. Some agents ran businesses on the side using Glickman’s telephones and copying machines. At the free luncheons, agents would bring their families and friends. One agent, who was also a builder, said he brought 10 day laborers to eat the free food.
Many real estate executives say such stories underscore Glickman’s naivete and lack of business acumen. Noted Merrill of Prudential: “The chairman of our company has an MBA from Harvard.”
Glickman never attended college. He started in the real estate market at 15, delivering flyers for local agents.
Three years later, he was working as a real estate agent in the Valley, eventually landing at Jerry Berns & Associates. He left in 1983, at 23, to start his own company, and within four years it had grown large enough to acquire his former employer, the Jerry Berns firm.
Glickman’s rapid growth was fueled by his creative promotions, such as delivering pumpkins to children on Halloween, picking up trash for clients during a garbage strike and giving out gasoline during the energy crunch.
He also became known for hiring large numbers of relatively inexperienced agents and training them to aggressively pursue listings, even if that meant agreeing to lower commissions in order to clinch the listings. At one point he had more than 1,800 agents working for him.
And he was brash enough to predict, in a January, 1988, interview, that his rapid rise was but a prelude: “For my 30th birthday, which is in 1990, through the year 2000, I intend to open up a Mike Glickman Realty office in every major market in the United States.”
But some observers say the focus on getting large numbers of listings hurt Glickman once the market started to slow.
“Oftentimes the mentality of a broker that’s trying to grow is, if you have all these ‘for sale’ signs up, people assume you’re doing the closing as well, which may not be the case. In a booming market, that’s an effective strategy. In a slowing market, you want to be more selective in properties you take,” said Merrill.
“I think the Brentwood expansion is what did him in,” said David Eisner, managing partner of Price Waterhouse’s real estate group, adding that Glickman’s overzealous expansion was probably based on “ego-driven decisions.”
Even as the market began to slow last year from the heady days of the real estate boom of 1987 and 1988, Eisner and others say, Glickman did not heed the warning signs and continued to add to his overhead.
“Promotion is important in real estate and razzle-dazzle is all very nice, but there has to be substance in addition to that,” said Fred Sands, owner of Brentwood-based Fred Sands Realtors.
Glickman himself may have put it best.
“I personally might have gotten caught up in the excitement of the years of the ‘80s, when bigger just seemed to be better,” he said last month after announcing the closing of his offices in Brentwood and Beverly Hills and admitting that his much-publicized Westside expansion had been a failure.
During the past several weeks, however, Glickman steadfastly denied that his company was in dire straits and that bankruptcy was under consideration. “I’ll be around forever,” he said in an interview with The Times a few weeks ago.
Late Sunday, Glickman’s more than 1,200 agents were told that the five remaining offices in Woodland Hills, Encino, Sherman Oaks, Northridge and Agoura would close by Wednesday in preparation of the company’s liquidation. Arthur Greenberg, Glickman’s attorney, confirmed that the Chapter 7 bankruptcy filing was made Tuesday afternoon in federal court in Los Angeles.
Greenberg said that a lawsuit by one creditor, the owner of a Sherman Oaks building that Glickman leased, precipitated Tuesday’s bankruptcy filing, since Glickman feared he would have been forced into an involuntary filing by the landlord and other creditors.
Meanwhile Tuesday, some of Glickman’s creditors said they were outraged at the news of the bankruptcy filing. Only last week, said Lenn Grabiner, a principal in Grabiner/Hall Designs in Studio City, Glickman and his attorneys held a meeting with about 30 creditors. The creditors were asked to respect a moratorium on payments for 60 days, after which they would work out payment schedules, Grabiner said.
“There are a lot of angry creditors who feel they’ve been lied to,” said Grabiner, who is owed about $45,000 by Glickman. Grabiner designed Glickman’s ads and promotional materials, including the well-known white and black Mike Glickman logo.
Saul Winter, chief financial officer of Custom Treatment Inc. of Northridge, which Glickman owes about $40,000 for carpeting, said the creditors had asked to see financial statements on Glickman Realty for the past year but were told at the meeting that such figures as total debt and cash flow would not be available until June 14, when another meeting was scheduled.
“We as creditors were told to stop worrying, they had consultants and were working it out and ‘We’ll let you know when you’ll be paid.’ We feel as a group, frankly, that we’ve been taken.”
Still, many predicted Tuesday that Glickman would land on his feet, and noted persistent rumors that he had reached a deal to work for Beverly Hills-based Jon Douglas Co.
But Glickman kept mum Tuesday about his plans. He spent the day saying goodby to a steady parade of agents who dropped in at his small office. The pink walls were studded with nails left behind when dozens of photographs, plaques and certificates were boxed up.
“I have a lot of decisions to make,” said Glickman in a brief interview. “I haven’t made any decisions.”
When asked to confirm the rumor that he would soon be working for Jon Douglas, he replied: “I’ve had a lot of offers. I have been weighing them all.”
Douglas also would not confirm or deny the rumors, but said he would be interested in hiring Glickman. Even so, Douglas had some critical words for the young entrepreneur.
“I think in general Mike didn’t pay as much attention to the administrative side as he did to the sales side. In a hot market, if you just keep selling, it covers up the administrative side.
“I wouldn’t put him into the administrative side of my business,” said Douglas.
CONSUMER CONCERNS--Answers to questions that buyers and sellers may have. D1
