Key National Lumber Executive Forced to Resign : Retailing: Creditors pressure vice president, who quits, while chain liquidates 3 more stores. Chances of survival are dim.
A top executive recruited in June to resuscitate bankrupt National Lumber & Supply Inc. has resigned and the company is liquidating three more stores, leaving just two home-improvement centers in a chain that once had 21 outlets.
The resignation of Executive Vice President Martin C. Schaeffer, the company’s second highest ranking officer, and additional store liquidations make the firm’s chances for survival appear dim. The company filed for Chapter 11 bankruptcy in April and has been struggling to right itself ever since with little success.
Schaeffer, a former vice president of Chicago-based Handy Andy Home Centers, stepped down Monday under pressure from increasingly disgruntled creditors. As chief operating officer, he was in charge of all operations but finance and reported directly to Chairman Mel Jaffee.
Schaeffer declined comment on his departure.
The company this week quietly began the liquidation sale of three more centers in Long Beach, Fontana and Ontario. On Aug. 11 the company said it was liquidating seven stores, including its remaining three in Orange County.
However, the status of its store in Garden Grove is now unclear. In advertisements for its liquidation sale, the company said it is selling the merchandise in the Garden Grove center but the store would remain open. Company officials would not comment.
The two stores that will remain operating are in the Palm Springs area of Cathedral City and Encinitas in San Diego County.
A company source said that most of the staff at the company’s Fountain Valley headquarters were told they will be laid off Friday. In addition, Max Robuck, a home center veteran who joined National Lumber in May as the merchandising chief, is expected to resign soon.
After National Lumber filed for a Chapter 11, it has tried to reorganize with a new marketing direction that would set it apart from larger home centers such as HomeClub and Home Depot.
One company source, who spoke on condition that he not be identified, said the company’s plans for a rebirth into a new kind of home center launched after the bankruptcy filing never really took root.
“We started, but it was, in my opinion, too late,” the source said. “I wish things would have been different.”
Filings in U.S. Bankruptcy Court in Santa Ana shows that the firm has continued to bleed red ink, drawing down its already dangerously low cash reserves and forcing the liquidation of much of its merchandise to pay bills.
In a filing asking the court for permission to hold the liquidation sale, National Lumber reported that without the sale and store closures the company would be unable to meet payment of $475,000 in payroll, $200,000 in rent and over $634,000 to “professionals”--presumably attorneys and business consultants--hired after the bankruptcy filing.
An attorney for one of National Lumber’s landlords objected to the hiring of an outside agent to conduct the sale to raise more money for National Lumber’s operations, saying the home center chain is not likely to raise enough money to pay its obligations in bankruptcy, much less its pre-bankruptcy debts.
The attorney, Dennis E. McGoldrick, said that Jaffee had told him several weeks ago that the company was losing $200,000 a week and only had credit availability of $600,000.
In an attempt to salvage its operations after filing for bankruptcy, National Lumber hired three business consultants who charged between $150 to $350 an hour. The creditors committee filed an objection to the hiring of the firm headed by consultants Harvey Kimbel and Steven Green.
