It’s been a long, slow, painful death for the once-thriving Hacketts chain. The company filed for bankruptcy protection last year. Its stores have been closing one by one for a few years.
Last week, Hacketts closed its last remaining store, an outlet center in Ogdensburg. According to the Watertown Daily Times, that came after the federal bankruptcy judge converted the case from Chapter 11 protection – the kind of bankruptcy companies reorganize and emerge from – to Chapter 7, where the company is prepared to be liquidated.
The case is a thicket of debt and creditors, but it seems to come down to the plan to emerge from bankruptcy put forth by Thomas Scozzafava, the CEO of Hacketts parent company, Seaway Valley. In a nutshell, the creditors don’t buy it. Here’s the Times treatment:
KeyBank, to which Hacketts owes $423,000 on a consolidated promissory note, counters that it is too late in the bankruptcy process for Hacketts to shift its strategy away from “speculative” funding and offer a plan that will be funded solely from operations and the sale of assets.
KeyBank claims, among other things, that the first rejected statement showed Hacketts would operate at a loss for at least six months out of every year of its proposed plan.
Mr. Scozzafava had a different opinion.
“After numerous complaints, we tried to keep the company bigger, but that depended on monies coming into the company, and the biggest complaint literally was the source of our funding is speculative, and not a sure thing,” he said. “I said, ‘OK, then let’s take the speculation out of it, and we’ll just show you what we can do without that coming in,’ because they were attacking the feasibility of the plan.”
The “speculative” funding referred to seems to be Seaway Valley’s pile of complex debt instruments that have amassed over three years. Check out my 2009 report on Seaway Valley for the details.