Ritz to Exit Boating Business, Seeks to Sell 400 Camera Shops
Wednesday, March 11, 2009
Ritz Camera, trying to raise cash to cover its mounting debt, received approval in bankruptcy court yesterday to begin the process of liquidating the assets at all 130 shops operated by its Boater's World Marine Centers.
Moreover, attorneys for the Beltsville-based company, the nation's largest photography retailer, said they will file a motion on Friday seeking to sell off half of its 800 Ritz camera stores.
The privately held company filed for Chapter 11 bankruptcy protection last month to cover more than $54 million in debt to such creditors as Fuji Photo Film, Nikon, Canon USA and Wachovia Bank. A U.S. bankruptcy judge in Wilmington, Del., where the case was filed, approved bidding procedures for the sale of the Boater's World assets.
The attorneys for Ritz Camera said the company has received bids from six liquidators and other potential buyers for assets of the marine business, which would be sold at auction on March 17. The attorneys said they would seek court approval to use the same procedure to sell off the 400 Ritz stores in early April.
"The main goal is to move the company back to being a profitable company," said Irving Walker, a Baltimore lawyer who represents Ritz.
"We will liquidate the assets in the less profitable retail stores," Walker said. The company, he added, has not specified which 400 camera stores would be closed. Ritz has a total of 51 stores in the Washington area. "We believe we can reorganize through the Chapter 11 plan and emerge a smaller, better and stronger company."
Ritz is among several major retailers that have filed for bankruptcy protection in the past year. Linens 'N Things and Circuit City, which sought to reorganize, ultimately closed. In its bankruptcy filing last month, Ritz said it wants to "continue as a going concern."
The House Judiciary Committee has scheduled a hearing for today to discuss why bankruptcy protection often fails to save companies like Circuit City.
"In light of the 2005 amendments to Chapter 11 of the bankruptcy code, the hearing will examine whether Chapter 11 is working as Congress intended," said Jonathan Godfrey, a spokesman for the committee.
Analysts and legal experts were mixed on Ritz's plan to save itself.
"It sounds like they're shedding their losses and going back to their core business," said Mark Millman, president of Millman Search Group, a Baltimore-based retail-consulting firm.
"They're getting rid of unprofitable stores, unloading the ones where the real estate doesn't work for them," he added. "It's a smart move."
But Marc Ominsky, a Greenbelt-based bankruptcy lawyer not involved in the Ritz case, said the tight credit market makes it difficult for any company going through Chapter 11 reorganization to raise cash to pay off debts. "Who's loaning money [for companies] to buy businesses in trouble?" he said.
Ritz began as a single portrait studio on the Atlantic City boardwalk in 1918. It expanded to a photo processing lab at 11th and G streets NW in the District in 1938. Over the years it expanded by buying regional camera shops throughout the country. It established Boater's World in the late 1980s.
The company in its bankruptcy filing blamed its financial problems on customers' switch from film to less-profitable digital products and the economic downturn, which has severely reduced consumer spending on such big-ticket items as camera equipment and boating supplies.
Staff researcher Eddy Palanzo contributed to this report.