Tam’s Files for Bankruptcy Again
Tam’s Stationers Inc., an office supply chain that emerged from bankruptcy a year ago, couldn’t meet its financial goals and went back to court Friday to liquidate its assets.
Tam’s, which opened its first store near USC in 1947 and expanded throughout Southern California to 23 stores with 250 employees, couldn’t compete with the office supply superstores like Staples, Office Depot and Kinko’s.
“There is no future for stores like Tam’s. The big guys drove the mom-and-pops out,” said Tam’s bankruptcy lawyer, Marc J. Winthrop of Newport Beach.
In its filing in U.S. Bankruptcy Court in Santa Ana, Tam’s listed assets of $1.15 million and debts of $3.65 million.
Friday’s decision came a week after three creditors filed a petition to force the Mission Viejo chain into liquidation under Chapter 7 of the U.S. Bankruptcy Code, which would have put the company in the hands of a trustee.
Winthrop asked the court Friday to convert that filing into a voluntary Chapter 11 liquidation, which gives current operators power to dispose of assets.
“That’s a more orderly way to go,” Winthrop said. “The people with the expertise are management. The trustee just bundles everything up and brings in the auctioneer.”
He said he told creditors several weeks ago that Tam’s would be going back into bankruptcy. Three of them decided to force the issue a few days early by filing the involuntary petition, an apparent effort to gain a greater say in the sale of assets.
“We don’t think it makes sense to keep the company in the hands of management,” said Evan D. Smiley, a Costa Mesa lawyer for the three creditors.
For the last month, Tam’s has been closing 21 of its stores, including five in Orange County. Stores at USC and at Tam’s headquarters in Mission Viejo will remain open and be sold. The USC store, one of the few profitable outlets, was closed last week but will reopen next week, Winthrop said. The Mission Viejo store, he said, is tied up in a headquarters lease.
In April 1994, Tam’s, then based in Costa Mesa, sought to reorganize its debts under the code’s Chapter 11 provisions. Its financial health was imperiled by an ongoing dispute with Imaging Financial Systems, which financed more than 100 photocopy machines in Tam’s stores.
At the time, Tam’s listed $2.9 million in assets and $5.8 million in debts. The chain emerged from bankruptcy in May 1995, with a plan to repay creditors over time. Despite efforts to reposition itself to compete with the office supply giants, Tam’s failed to meet sales expectations, Winthrop said.
Imaging Financial, still among its creditors, now will repossess its photocopiers, he said.
