MADISON HEIGHTS - Damman Hardware emerged from Chapter 11 bankruptcy protection on Monday with an $8 million line of credit and a new inventory system designed to put more items on store shelves.
With its bankruptcy behind it, Damman has received a line of credit from LaSalle Retail Finance in Boston that will be used to stock seasonal items such as shovels, gardening items and snow blowers, the company said.
“This is a new beginning,” said Frederick Marx, a spokesman for the Madison Heights-based chain. “Sales have been stabilized, and with these two new relationships, we are very encouraged about our sales prospects looking forward.”
Hmmm? While I do not know the details of this company's use of the bankruptcy laws, it sure is common to see businesses file Chapter 11 one day and have very attractive DIP (Debtor In Possession) funds available the next day (actually the financing arrangement is in place before they file).
Then, during the "reorganization", the unsecured debt is virtually wiped out (with the unsecured creditors getting little or nothing from what is owed to them).
Then, the day they emerge from Chapter 11, they have lenders in place ready to lend plenty to the business that now has a "new beginning" because their balance sheet now looks great (at the expense of their suppliers' balance sheet - unless the supplier had business credit insurance).
Business Credit Insurance
You got that right Glen.
ReplyDelete