Wakeman Files Under Chapter 11 : Advertising: The agency hopes that the filing will give it time to raise cash. It lists assets of $1.1 million and liabilities of $3.3 million.
In the latest sign of trouble in Orange County’s advertising industry, Wakeman & deForrest has filed for protection from its creditors under Chapter 11 of federal bankruptcy laws.
The 10-year-old ad agency listed assets of $1.1 million and liabilities of $3.3 million in its petition filed Thursday with U.S. Bankruptcy Court in Santa Ana.
The Chapter 11 filing is intended to buy time for the company until it can raise cash by selling an interest to an outside investor, said William W. Junkin, Wakeman’s president and chief executive.
Junkin would not name the investor, but the ad agency is reportedly negotiating with Media Marketing Services, which has opened an office in the same Santa Ana building that houses Wakeman. A bankruptcy court judge must approve any capital investment.
“We’re a small business, and we were undercapitalized for the economy we’re in,” he said. “We ran into that buzz saw.”
Wakeman, once Orange County’s sixth-largest ad agency, has been losing clients and employees during the past year.
It lost one of its biggest clients, PacTel Cellular/Los Angeles, in March. The account was worth an estimated $8 million to $10 million in billings. PacTel transferred its business to Salvati, Montgomery, Sakoda & Co. in Costa Mesa, and four Wakeman employees went with the account.
In the past 16 months, Wakeman has lost all but 14 of its 48 employees. Junkin said the company’s billings, which were $18 million during its last fiscal year, are expected to reach only about $7 million for the current fiscal year, which ends Oct. 31.
He also said that the company is awaiting payment of sizable billings so it can pay creditors. The bankruptcy petition lists unpaid billings, mostly one to two months past due, of $481,630. The biggest amount, $364,096, is owed by Upper Deck Co. in Vista, a maker of sports collector cards. Other assets include office equipment and other personal property.
Wakeman’s bankruptcy petition lists only one secured creditor--First United Leasing Corp., which is owed $6,439. Among unsecured creditors owed more than $20,000 are the Denver Post, the Los Angeles Times, the Devon Junkin Trust, the Trent Junkin Trust and the Newport Beach law firm of Stradling, Yocca, Carlson & Rauth.
The total owed to secured and unsecured creditors is $451,000. The petition did not indicate the basis for nearly $3 million more in liabilities, and Junkin didn’t explain it.
Wakeman is in good company with its financial troubles.
Of the 420 advertising and related agencies listed in the 1990-91 AdBook, 42% had closed by the time research began for the 1991-92 edition.
