NPR's Tovia Smith is following the economic fortunes of Bowl & Board, a family-owned chain of housewares stores in New England. This is her sixth story about the business. Read the series here.
In the four decades that Bowl & Board has been in business, the early spring has always been the houseware chain's slow season. But it's never been as bad as this year.
Owner Mark Giarrusso has tried sales and marketing, but he says the customers are not coming.
"We could be juggling fire and doing lap dances, and it wouldn't really matter," cracks store clerk Matthew Shinnick.
Fighting For Lower Rents
For Bowl & Board, the slowdown couldn't come at a worse time. After three months in Chapter 11, the business has to prove that it's profitable or it may be forced to liquidate. Giarrusso has already cut most his expenses to the bone. Now, he figures the only way he'll make it is if he can reduce the rent at his remaining two stores by about 20 percent.
"I have run these numbers 10 times over," he says. "That's [what I need] just to survive."
But Giarrusso is more than a little skittish about asking his landlords for a break.
After all, it was a fight over rent that forced him to close his Brookline, Mass., store and file for bankruptcy protection in the first place.
He's hoping his remaining two landlords will prove a little more flexible. But the signs are not good, especially in Somerville, Mass., where his landlord seems to be going to the mat over who's going to pay for a new door lock.
"They are chasing me on a $119 bill!" says Giarrusso. "And next week I'm going to ask them to drop the rent $1,000 a month? We're not going to get anywhere."
More Bad News
Giarrusso begins to think about the worst-case scenario and how he can get another job if he has to.
Then, he gets what could be the fatal blow from the bank that processes his credit card sales. The letter says: "We regret to inform you that your merchant account will be deactivated due to your deteriorating credit profile."
Not only is the bank shutting him off in a month, but it's also demanding a $40,000 security deposit. And the bank is going to hold back money from his credit card sales until the reserve is satisfied.
"It's crazy!" Giarrusso exclaims. "I'm getting burnt out. It's going to be another fight to get another credit card company. Who's going to open a new account [with us while we are in] Chapter 11? It's not going to happen."
Then, just when he thought it couldn't get worse, Giarrusso gets word that his old landlord has just asked the court for an emergency hearing to force Bowl & Board to liquidate.
In papers filed with the court, attorney Rosemary Macero argues that Giarrusso has failed "to aggressively reduce the expenses and increase the cash flow," and has "no reasonable likelihood of rehabilitation."
She argues that Giarrusso is rapidly depleting his inventory and, in six months, there will be nothing left to satisfy his debts since creditors "must rely upon the value of the debtor estate for any potential recovery."
Giarrusso disputes her numbers and her tactics. His lawyer fires off a reply imploring her to "abandon [her] 'scorched earth' strategy," and insisting the landlord will get more if Giarrusso can stay in business, rather than liquidate.
"I have 44 years of history that show huge losses in January, February, March and April, and then we make hay," Giarrusso says. "The tractor's in the barn. We come out of the gates in May and June. And you know, to liquidate weeks before the season — it's crazy."
"It just takes the wind out of your sails," he says.
Meeting With Landlords
Two weeks before Giarrusso is due back in court, he still hasn't negotiated a break on his rent. His landlord in Somerville cancelled two meetings before finally seeing Giarrusso. Then, he promised to get back to him the next day, but never did.
Three days later, Giarrusso sits down with his Providence, R.I., landlord, and he leaves the meeting smiling.
"It was a wild meeting!" Giarrusso says. "It was great. It felt like we were both on the same team, you know?"
The landlord is willing to lower the rent a little now, if Giarrusso will pay more later. The landlord is also willing to trade some rent for merchandise and is offering to help the store with marketing.
"I like these guys," Giarrusso says. "They're good guys, and we're in business together — that's what we've come to realize, and they're going to work with us ... to make it happen."
Hours after that meeting, more good news arrives. Giarrusso gets another letter from the bank that processes his credit card sales.
"Please be advised we will not be deactivating your account at this time," the notice says.
Overwhelmed and overjoyed, Giarrusso calls the name at the bottom of the letter to say thank you.
"You have no idea," he stammers to the woman's voice mail. "You just saved a lot of headaches. And potentially saved this company right there with that."
Before the week ends, there will be even more positive news. Giarrusso's Somerville landlord finally calls back with a counter offer. It's not everything Giarrusso was hoping for, but like the other, this landlord is willing to reduce rent now, if Giarrusso agrees to pay more later.
For the first time in months, Giarrusso says he's feeling the wind back in his sails.
"We still have a lot of hurdles to get over," he says. "But I can see the finish line — potentially. Of course it's up to the economy, but I have more confidence ... we can do this."
It's a good place to be as Giarrusso heads back into bankruptcy court. He's got two hearings in the next two weeks.
First, he'll be asking the judge to let him keep going in Chapter 11 bankruptcy protection. And then, Giarrusso hopes to be able to show the judge how he plans to get out of it, and how he will manage to pay back his creditors with more than they'd get if he had to liquidate.