Missoula, Mont. – Vann’s, the 51-year-old A/V and majap chain, will begin liquidating its assets next month after failing to obtain sufficient funding to emerge from bankruptcy.
The Montana-based chain filed for Chapter 11 protection on Aug. 5, but could not convince lenders to extend an additional $3 million to $5 million, which recently named CEO Jerry McConnell deemed necessary to keep the business afloat.
“We’ve reached the point where we have to admit we can’t make this work in today’s economy,” McConnell said in a statement.
Vann’s informed the U.S. bankruptcy court in Butte, Mont., of its plans last Wednesday, and has given employees a 60-day layoff notice.
“Our analysis shows that the company might have been able to make it, but only with an infusion of an additional three to five million dollars, which just isn’t in the cards,” McConnell said. “We looked at other scenarios, too … but the way our sales have been falling off lately those strategies didn’t pencil out.”
A restructuring team is developing wind-down and sale alternatives which will be presented to the bankruptcy court by the first week of October. Going-out-of-business sales are likely to begin soon after, the company said.
McConnell told the local Missoulian newspaper that inventory will likely last through November, after which all stores will be closed.
The company, which had 2011 sales of $100 million, operates five stores, a pioneering e-commerce site, and a mall-based CE/IT boutique called On.
It closed three locations over the past year, and employs 150 staffers.
“They worked hard to give this a go,” McConnell said, “and I’m sorry they’re the ones to suffer for the company’s losses.
“Our focus now,” he said, “is preserving value for the company’s creditors.”
Vann’s top unsecured creditors and their claim amounts include: Klipsch ($600,673); UPS ($221,360); Warrantech ($178,431); D&H Distributing ($159,466); Onkyo ($137,106); Denon ($133,001); Definitive Technology ($111,084); and Yamaha ($105,696).
McConnell, a turnaround specialist, was brought in last June to succeed longtime CEO George Manlove. Manlove was instrumental in developing Vanns.com, one of the industry’s earliest authorized e-commerce sites, and more recently broadened the company’s focus by founding Big Sky Country, an online store for outdoor apparel. A former chairman of the Progressive Retailers Organization buying group (PRO Group), he has since joined Velodyne Acoustics as global sales and marketing VP.
Founded here in 1961 by Pete Vann, the PRO Group dealer remains the largest independent CE/majap retailer in Montana.