MACKENZIE-CHILDS LTD. IN SEARCH OF A BUYER COMPANY ASKS BANKRUPTCY JUDGE FOR PERMISSION TO HIRE A FINANCIAL ADVISER.
December 22, 2000•The Post-Standard Syracuse, NY • Greg Munno Staff writer
MacKenzie-Childs Ltd. is looking for a buyer to dig it out from more than $15 million in debt, according to testimony Thursday in U.S. Bankruptcy Court in Utica. That could mean the end of Victoria and Richard MacKenzie-Childs’ ownership of the company, according to company officials and court papers.
The couple built the company over 17 years from their personal ceramics workshop into a business with an international reputation and 250 employees. They own more than 98 percent of the company, which is based just north of the village of Aurora, with a sliver belonging to their daughter, Heather.
On Nov. 27, the company and two of its subsidiaries filed for chapter 11 bankruptcy protection.
In a hearing Thursday before U.S. Bankruptcy Judge Stephen D. Gerling, MacKenzie-Childs asked for permission to hire Conway Del Genio Gries & Co., a financial adviser. MacKenzie-Childs wants the firm "to identify possible purchasers of all or substantially all of the debtor’s stock and assets," documents show. The court held off on granting permission until a dispute over how the company would be paid is settled.
In an interview after the hearing, MacKenzie-Childs Chairman and Chief Executive Officer MacDonell Roehm said the company needs a major investment to repay its creditors and continue operating. He didn’t want to speculate about how such a deal would be structured but said it was possible that Victoria and Richard MacKenzie-Childs would lose ownership of the company. Roehm said any potential buyer would likely cut a deal with Victoria and Richard to keep them involved. "They are the cornerstone of the company," he said. "You would imagine that an investor in the company would accommodate them."
Lee Woodard, the couple’s personal lawyer, agreed. "Victoria and Richard are that company," Woodard said. "They need to be involved in the company for the company to have value." Neither could be reached for comment.
Thursday’s hearing underscored how the couple has already lost much of their control over MacKenzie-Childs. The company’s lawyer, Stephen Donato of Hancock & Estabrook, filed 20 motions with the court asking permission for the company to carry out such routine business functions as paying its workers. In addition to Woodard and Donato, four other lawyers took part in the proceedings and also had the right to influence how MacKenzie- Childs conducts business from now on.
Assistant U.S. Trustee Guy Van Baalen was there overseeing the case. Jeffrey Dove of Menter, Rudin & Trivelpiece had a seat at the table representing MacKenzie-Childs’ largest creditor - BSB Bank & Trust, which is owed $11 million. Also at the table were lawyers representing the firms that leased property to MacKenzie-Childs for a larger store on Madison Avenue and a new one on Rodeo Drive. MacKenzie-Childs was officially let out of those two leases Thursday, something the company had sought to do by filing for bankruptcy. But that also clears the way for the owners of the properties to file a claim for back rent, which totals more than a million dollars, Donato said.
Roehm said he still sees the company surviving. Although it lists $22 million in assets - more than its debts - Roehm said that if MacKenzie-Childs were liquidated and broken apart it would fetch only a fraction of that amount. As a result, creditors are likely to work with the company to ensure it continues.
Caption: PHOTO Dick Blume/Staff photographer MACKENZIE-CHILDS Ltd. in Aurora filed for Chapter 11 bankruptcy protection on Nov. 27. The company has asked a judge for permission to hire a financial adviser and search for a buyer. Color.