Although cataloger/retailer Petals filed for Chapter 11 bankruptcy protection on May 21, president/CEO Richard Belenski insists that the company isn’t dying on the vine.
In its filing with the U.S. Bankruptcy Court for the Southern District of New York, the marketer of artificial flowers and home accessories listed $32 million in assets and $40 million in debt. When reached by Catalog Age, Belenski issued this statement: “The fundamental business model of Petals, including margins, response rates, and average order, remain strong around the core of a significantly larger 12-month buyer file year on year.” None of the Tarrytown, NY-based company’s top creditors holds more than $2 million in claims against Petals, according to the filing.
Prior to December 2001, the assets and stock of Petals, then a wholly owned subsidiary of Interiors, had been pledged as collateral for debt financing by its parent company, according to Belenski. When the now-defunct Interiors could not liquidate its debt, its creditors foreclosed on their collateral, and Petals became a freestanding company. Petals retained significant liabilities — primarily Interiors’ $26 million worth of debt, Belenski said. To avoid being evicted from its Suffolk, VA, warehouse, which holds a substantial part of its inventory, Petals had to file for bankruptcy protection.
“The company needed to raise money or at least establish a line of working capital to handle the basic seasonal cash requirements of the business,” Belenski said. “This became impossible with such a highly leveraged balance sheet.”
Petals will keep running the Virginia distribution center and plans to move the operations of its Florida facility there later this year. The company will also continue to operate its three stores, while its corporate headquarters and call center will remain in Tarrytown.