Aseries of marketing mishaps forced North Adams, MA-based global goods cataloger Eziba to shut operations in January. On Jan. 14 it laid off 12 of its 18 employees; four days later president/CEO Bill Miller resigned. Now the six-year-old marketer must liquidate its assets to pay back creditors.
Eziba, whose estimated annual sales were $5 million-$10 million, opted to sell on assignment — an alternative to filing for bankruptcy that is generally a quicker and much less costly process. The marketer could not stay current with payments to vendors, and many creditors were requiring it to prepay for inventory. What’s more, the Massachusetts Museum of Contemporary Art in North Adams, where Eziba operates a freestanding store, on Jan. 18 filed suit against the merchant in Berkshire (MA) Superior Court, claiming breach of a lease agreement exceeding $95,000.
As of mid-February a court-appointed assignee for the benefit of creditors, Springfield, MA-based law firm Hendel & Collins, was sorting out bids from 15-20 potential buyers. One of the bidders was an internal group of investors that included Eziba cofounder Dick Sabot. Sabot’s group filed a letter of intent to buy the assets of the company and restart the troubled marketer as an online-only merchant.
“We are working our way through that process right now,” Joseph Collins, an attorney with Hendel & Collins, told Catalog Age on Feb. 7. “We don’t have a timetable. Our goal is to maximize the recovery of dollars and do what’s in the best interest of the creditors.”
In a letter sent Jan. 21 to unsecured creditors, Eziba listed $250,000 in cash; inventory in a Virginia warehouse and in the Marshall Field’s stores valued at about $400,000; and accounts receivable listed at $75,000. Eziba’s liabilities include tax debt estimated at about $200,000 and approximately $1.7 million of trade debt.
The blame game
Eziba blames its woes on a computer error that sent tens of thousands of fall catalogs to the customers least likely to respond rather than to the most likely buyers. Sales for September and October fell far short of goal; by the time Eziba realized what had happened in October, the damage was done.
Founded as a Website in 1999, Eziba had a $100 million valuation at the height of dot-com fever. It launched a print catalog in 2000. That same year, Amazon.com took a 20% stake in the company as part of a $70 million round of financing. In 2003 a consortium invested another $3.8 million in the firm.
Eziba has had its share of bad luck. Two years ago the roof of its fulfillment service provider’s Dover, DE, warehouse collapsed following a February blizzard. The destruction of Eziba’s goods all but halted March 2003 sales.
Ironically Eziba’s liquidation comes on the heels of a successful holiday season: The company says that sales generated by its Website, catalogs, and stores were up 25% from the previous year.