Boston Store Is Coming Back

If you have been to one of our local malls recently you will have noticed a big change — all the Boston Stores have gone out of business. The popular department store, which was established in downtown Milwaukee in 1897, and ultimately grew to form the core of the larger Bon-Ton group, filed for bankruptcy back in February. In August, the entire chain, which had corporate headquarters in Milwaukee, liquidated its merchandise and closed its doors.

But just when we all thought it was gone for good, Boston Store announced its comeback. The bankruptcy court signed off on a deal that gives a company called CSC Generation ownership of Boston Store’s intellectual property assets, including the company name, customer data and databases, and social media accounts and content. Almost immediately after the purchase was approved by the bankruptcy court, the Boston Store website came alive, and rumors of a brick and mortar renaissance were rampant.

CSC Generation claims its mission is saving companies from Amazon, and intends to save Boston Store by making some radical changes. It will focus on e-commerce, as is apparent with the relaunch of the Boston Store website, but it also says that it hopes to reopen some brick and mortar locations for the holiday season. However, these stores will be smaller and open fewer hours, just Thursday through Sunday. The stores will also offer services like personal styling and interior design, and allow customers to buy big ticket items via a new lease to own financing system.

Boston Store’s innovative comeback is getting a lot of attention because it is not the traditional return from bankruptcy. A new company is using the old name, but doing things radically different than everyone else in the department store sector. We wish more of the articles on the company’s planned innovations would highlight how going through bankruptcy made this possible.

The flexibility that bankruptcy provides is unmatched. As we have said many times, it is a tool that companies and individuals should be wary of, but should not hesitate to use if other options are limited. Our firm frequently works with businesses who are interested in using the bankruptcy process to retool and revamp.

 

The Ripple Effect

This month marks the tenth anniversary of what is viewed by many as the beginning of the 2008 financial crisis — the bankruptcy of Lehman Brothers. Over the past decade, the ripple effects from the Lehman Brothers bankruptcy spread to countries throughout the world, and to businesses here in Milwaukee, raising awareness that one bankruptcy can lead to many.

The year before it collapsed, Fortune magazine named Lehman Brothers the No. 1 “most admired securities firm” in the country. Today it is the poster child for risky investments and bad decision-making. The company simply held too many subprime mortgages, and when the housing bubble popped, there was no way for it to recover.

Once Lehman fell it was as if everyone was finally able to see that the emperor had no clothes. The federal government pumped over $700 billion into the financial sector to stave off a complete collapse, but still an estimated 6 million jobs were lost, unemployment rose 10%, the Dow Jones Industrial Average dropped an astounding 5,000 points, and bankruptcy filings skyrocketed.

We see a miniature version of this chain of events play out nearly every day. Whenever a business is in financial trouble, all the connected businesses and people are also put at risk. If one goes down, it is likely that others in its supply chain will follow. We work with many Wisconsin business owners who have been negatively impacted by the bankruptcy of a major customer or supplier, who must now act quickly to craft a financial workout and prevent their own downfall.

We regularly help businesses broker forbearance agreements with secured lenders, renegotiate equipment and real estate leases, and negotiate discounts with creditors. Over the years, we have developed strong relationships with the lenders and attorneys whose cooperation and patience are a necessary component of any successful workout. Our tenure in the field has also led to our credibility with the commercial lenders, whose yes or no vote on a workout proposal typically means the difference between an opportunity to recover and a bankruptcy filing.

If your business is teetering on the brink, or you are getting worried because a link in your supply chain has failed, don’t hesitate to reach out. As we are all too aware, recovery from the Great Recession was and is slow and painful. In the Milwaukee area, we just this year dropped to pre-recession levels of bankruptcy filings. In this sort of market, you need advisors you can depend on, and that’s why you can depend on Hanson & Payne.