Ritz Camera Files for Bankruptcy in Delaware ... Again
07/10/12
On June 22, 2012, Ritz Camera & Image, LLC, and various related entities (collectively, the "Debtors" or "Ritz II"), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Those familiar with Ritz Camera know that the company's predecessor, Ritz Camera Centers, Inc. ("Ritz I") previously filed petitions for bankruptcy with the Delaware Bankruptcy Court in February 2009. Ritz II, which was originally owned by David Ritz, members of the Ritz family, and other investors, was the successful bidder at Ritz I's bankruptcy auction.
According to the Declaration of Debtors' Chief Restructuring Officer (the "Decl."), Ritz II is the largest specialty camera and image chain in the United States. The company operates 265 stores in over 30 states. Decl. at *3. Debtors also own Ritz Interactive, LLC ("Ritz Interactive"). Debtors describe Ritz Interactive as an "e-commerce network of interactive websites including RitzCamera.com, WolfCamera.com, BoatersWorld.com, CameraWorld.com, PhotoAlley.com, eAngler.com, ScrapbookingAlley.com, NeedleCraftsEtc.com, CeilingFansandMore.com, and ShotAtShark.com." Ritz Interactive is set-up so that it fills most of its online customer orders by purchasing inventory from the Debtors. Ritz Interactive's annual revenue for FY 2011 totaled approximately $36 million, whereas Ritz II's annual revenue totaled approximately $254 million. Decl. at *4-5.
Approximately 18 months after Ritz II closed on the purchase of Ritz I's assets, Ritz II refinanced its secured debt and sought additional funding. The refinancing resulted in a $25 million secured credit facility. whereas the subordinated debt generated an additional $8 million. In return for receiving the additional funding, the Ritz family became a minority interest holder in the Debtors. Decl. at *4.
According to the Debtors, the company made a profit in the second half of 2011 and sales were "significantly improved" in May of 2012. Decl. at *7. Despite the relative success, Debtors were unable to continue operations without additional liquidity and a reduced store count. Debtors enter bankruptcy intending to reject store leases they believe are not profitable and restructure their debts in a way that the company hopes will preserve business operations. Id.
The Ritz Camera & Image bankruptcy proceeding is before the Honorable Kevin Gross. Judge Gross is the Chief Judge of the Delaware Bankruptcy Court. Debtors are represented by the law firm Cole, Schotz, Meisel, Forman & Leonard, P.A.
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Jason Cornell is a bankruptcy attorney with the law firm Fox Rothschild LLP. Jason practices before the United States Bankruptcy Court for the District of Delaware. You can contact Jason with questions or comments at [email protected] or at 302 252 5833.
For those not familiar with corporate bankruptcy proceedings, below are posts on issues that frequently arise in bankruptcy:
Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy.
Seeking Relief from the Automatic Stay in Delaware.
A Tale of Two Bankruptcy Auctions.
What Information is Required in a Chapter 11 Disclosure Statement?