InkStop locked employees out in the cold, then reopens to liquidate
Dec 11th 2009 1:30PM
Updated Dec 11th 2009 4:36PM
Not all of the retailers 152 stores will reopen for the sale, said the liquidation partners in a written statement. Just 25 to 35 InkStop locations will reopen at selected sites in and around the Philadelphia, Washington, Cleveland, Detroit, Atlanta, St. Louis, Dallas and Denver metropolitan areas. Among the products to be sold are digital cameras, GPS units, MP3 players and computer gadgets. The sale will continue until all merchandise is sold, the liquidation partners said.
It wasn't supposed to happen this way. When stores shut in October, InkStop said the closures were temporary, telling employees in a letter that the company needed time to restructure and improve cash flow. Instead, the retailer filed for Chapter 7 bankruptcy, a step that results in the immediate liquidation of assets. InkStop reportedly owes more than $48 million to some 1,000 creditors, plus $1.1 million in back wages and benefits to its suddenly laid-off employees.
In its Oct. 1 letter to staff, InkStop management said, "Paychecks will not be issued on Friday due to our cash constraints. We are working on a plan to improve our cash flow situation and reopen under better circumstances," The (Cleveland) Plain Dealer reported at the time. The letter, signed by InkStop's board of directors, said further that medical coverage and other insurance had been paid only through Aug. 31. "Your patience during this difficult time is appreciated," the letter said.
Spurned InkStop employees immediately began a Facebook group to protest the sudden job losses and seek payment of three weeks worth of wages. The group has about 300 members. The abrupt closure also led to an entry on Daily Kos, a left-leaning website, urging the company's more than 500 employees to contact the department of labor in their state, Crain's Cleveland Business reported.
In April, Crain's reported InkStop raised more than $80 million in private equity from 150 investors worldwide.
"This was always built to be a large chain," InkStop CEO Dirk Kettlewell told Crain's at the time. "With our investors, we see it as a fast-paced retail concept with a management team that's done it before." Kettlewell, who envisioned a chain someday with as many as 3,000 stores, also said back in April that he expected his company to become profitable for the first time later this year. Clearly, that's no longer a possibility.