By:LARRY MAIER
The long-term health of Pergament Home Centers took a turn for the worse last week when the retail chain consented to enter Chapter 11 bankruptcy. The agreement came on Feb. 21 in response to an involuntary bankruptcy petition filed earlier in the month by three landlords seeking to recoup rent owed to them by Pergament.
The bankruptcy proceedings cast a cloud of doubt over the future of all of Pergament's branches. However, there is a small ray of hope for smaller express stores like the one in Baldwin.
According to Michael Brofman, the attorney for the three landlords, when businesses reorganize under Chapter 11 they can sometimes emerge stronger than ever. Chapter 11 bankruptcy allows a business to shed under-performing locations, change the type of business they conduct, or find better sources of financing.
And, according to a published report, Pergament's management has said it hopes to be able to successfully reorganize and keep several of its smaller express stores open.
Pergament did not return phone calls from the Herald.
That would be wonderful, said Ginnie Foley, president of the Baldwin Chamber of Commerce, who added that the Chamber has had no recent contact with either Pergament or David Rosen, Pergament's Baldwin landlord, about their intentions for the store.
Rosen was not available for comment before press time.
Chamber vice-president Doris Duffy said that while talk of the Baldwin store's demise is premature she is confident that the Baldwin business community would be helpful in finding a new tenant should the store close.
Brofman said the store has 60 days from the date of the bankruptcy filing to decide how they will proceed.
I don't know what they are going to do but my guess is liquidation and I think that's a really good guess, said Brofman.
Brofman said the aim of the legal action against Pergament was never to drive the chain out of business, but merely to recover money the landlords were owed. As part of the bankruptcy agreement, Pergament must now resume paying rent to all its landlords.
Pergament's has reached an agreement with its primary lender, Congress Financial Corp., to provide temporary funding to keep the store afloat while it attempts to reorganize. However, if Pergament is unable to find long-term financing or a more profitable way of operating it will likely go out of business.
