National Wholesale Liquidators Files for Bankruptcy

When I first saw it, I said to myself “damn things must be bad when even the liquidators are filing.” After clicking through I found out National Wholesale Liquidators was actually a discount retail chain, not a pack of cowboys running around shutting down companies and hocking the assets at auctions.

Personally speaking, I think the latter business is a lot more fun.

In China, folks are walking away from entire factories

LA Times:

First, Tao Shoulong burned his company’s financial books. He then sold his private golf club memberships and disposed of his Mercedes S-600 sedan.

And then he was gone.

And just like that, China’s biggest textile dye operation — with four factories, a campus the size of 31 football fields, 4,000 workers and debts of at least $200 million — was history.

Some of my fly fishing pals have noticed an increased number of solicitations for the white-label manufacture of rods and reels, mostly from China. The deals seem good compared to equipment prices in the US, but it’s the credit risk I recommend they dig into first.

At one time, dealing with foreign suppliers meant paying in cash or securing letters of credit - the overseas entity was uncomfortable with US bankruptcy laws and wouldn’t ship product without some protection. You still have to do business this way, only now you have to worry that the supplier will simply take your money and run.

I’d be wary of doing business on pay-in-advance terms with anyone right now (and particularly so if they are ten thousand plus miles away). If that’s the only way to get samples, ask if they have a domestic distribution point first and/or request some references. Don’t come out of the gate with custom orders either - specifically request sample stock or factory seconds.

And no matter the initial order size, always keep your fingers crossed. (h/t Calculated Risk)

SIDE NOTE: CR noted that Chinese contraction could result in higher intermediate/long term interest rates in the US, but called the notion “speculative.” I believe the concept is anything but speculative - shrinking capital flow into US Treasuries is impending reality. And “decoupling” isn’t really dead at all - instead it has changed stripes, with the Fed Funds target about to decouple from actual rates.

Jeffrey Miron opines that instead of accepting a bailout, banks facing failure should opt for bankruptcy filing instead:

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

Further, Chapter 11 passes restructuring risk to willing participants - those motivated and capable of adding new value to the business, whether it be capital, brainpower, or in most cases both. As banks go, I am not sure who understands the credit derivatives transaction chain well enough to take on such contingencies (but I’m am certain they exist), and court-supervised reorganization does allow for due diligence time if the entity can hold out (often assuming debtor-in-possession financing is available too, which could be questionable in this credit environment).

Outside of the banking crisis, Forbes notes it is never a bad idea to be prepared:

If you feel your business may be facing financial distress, meet with a work-out attorney now, before it is too late and your business becomes another statistic.

What Forbes doesn’t tell you is that once in Chapter 11, you’ll be faced with a myriad of financial and operational decisions that can become, to put it mildly, emotionally overwhelming. Add that in a reorganization you will be required to prove the business is worth more alive than dead, meaning get ready for a ton of strategy shifting and number crunching.

Editor’s Note: If you need someone who can stay alert during the trauma, priming objective decision making and spreadsheet mashing during trying times, contact me. I’m not only capable - I actually enjoy the stress. And I have plenty of references, both professional and personal, that can attest to the effectiveness of my candor and elbow grease.

Barclays has a sweet deal in hand - all it takes is a bankruptcy judge to give final approval. Hearing set for Friday.

Editor’s note: Start reading the linked article at paragraph three - the bit at the beginning about Chelsea Clinton being at today’s hearing not only doesn’t add anything to the real story, but it makes the whole process sound like some kind of circus side show.

No mention of purchase price on the $639 billion of assets (or portion thereof), probably because they need court approval first.

UPDATE: Forbes says the price is around $1.75 billion, and includes the investment banking and capital markets operations, as well as the Lehman headquarters property. In addition (I assume) Barclays will take on trading assets valued at $72 billion, and related liabilities of $68 million.

It’s just harder for Google to find.

Squidoo took a tongue (and Google) lashing for getting overrun with spammy pages/accounts. They’re open to the viewing public and efficient at generating attention from the rest of the internet - it was to be expected.

Facebook is growing like wildfire, and it seems a lot of folks are betting their reputations on it by showering the social network with glory. I say where there’s that kind of attention, there is bound to be someone lurking around trying to find a financial advantage. You can debate legitimate avenues for generating income off Facebook’s back, or you can keep your eye’s peeled for the sleek underbelly already working it’s way in. Some folks already see the latter, and aren’t too happy about it (although I’ll take criticism by the A-list crowd over the chance of someone from the Z-list crowd making some spare coin with a grain of salt).

Yes, Facebook has great privacy features, and it is closed off to the rest of the world to boot. But all that means is if spammers and scammers jump on the platform, it’s the users that are going to have to deal, instead of counting on Google to put the kibosh on it for them.

UPDATE: Even if the barrage that hits you is legitimate, it’s still a barrage. I don’t know what’s wrong with being so “web popular,” other than the fact that if you reject the invitations people will call you a jerk. Guess the price of online fame is bankruptcy.

UPDATE 2: Now, speculation about a hacking. Facebook offers a plausible explanation via Scoble.

UPDATE 3: More. This time it’s some source code exposed. Pete Cashmore throws in his ten cents - “An exposure of user data, therefore, is the identity thief’s dream.”

I thought I was dead, and looking down at myself reading the laptop screen. There is a pretty carefully crafted post on US economic uncertainties lying here - it almost seems out of place. Even the comments are uncharacteristic, and I have to say I agree with most of it.

Debt at all levels, no savings. And funky numbers being reported everywhere.

These issues are not going to just disappear, and I’d be hard pressed to think it can just be “worked out.” The problems run deeper than even the face value numbers suggest.

As for solutions, well that is anyone’s guess. But if you could encapsulate the situation into a corporate entity, I might start by taking a walk down to US Bankruptcy Court (and hopefully I was doing some business in New York so I could file in the Southern District).

According to Brian McWilliams, Spam King Scott Richter has been taken off ROKSO, otherwise known as the Registry of Known Spam Operations.

Now speculation is being made as to whether Richter has gone legit. I say it is simply too soon to tell.

In order to get off the ROSKO list, a spammer has to comply with a fully confirmed opt-in mailing list, meaning people must sign up to receive mail and confirm that signup in an additional email. Richter claims he has done this, and he likely has (something being removed from ROSKO proves as well). But he and his company are being scrutinized by the US Bankruptcy Court, for goodness sakes. If he continued spamming, the US Trustee, Microsoft, and all the rest would be screaming bloody murder, and the judge might very well throw the case out (as Richter filed primarily to avoid the pile of lawsuits following him around).

Two points will need to be considered going forward. First, will Richter’s operations suffer from opt-in, such that the business results decline enough to question its going concern capabilities? And second, will Richter start spamming again once a bankruptcy plan is confirmed (if it ever is)?

Time will tell.

The other day, Scott Richter (or someone claiming to be him - maybe one of his posse), sent me an email with with a court ordered creditor notice. Now Aunty Spam has posted a similar message.

I am so disappointed - I thought I was special.

During my visit to bankruptcy court last week regarding the OptInRealBig and Scott Richter cases, I noted that there were quite a few large creditors present, but not a lot of little ones. I am not sure if people realize this, but if you were the recipient of spam from OptInRealBig.com or its affiliates, you too may have a claim against the company.

While you have to be certain in your facts, there is a way for you to obtain information on filing a claim or even joining the creditors’ committee (should one ever be formed - I do not think this has happened yet).

How pray tell? Just ask Spamroll..

I’ve posted a form letter below that you can use for the purpose. You can copy and paste the contents into your favorite word processor.

***BEGIN FORM LETTER***

Leo Weiss
U.S. Department of Justice
Office of the United States Trustee
999 18th Street, Suite 1551
Denver, CO 80202

Re: OPTINREALBIG.COM, LLC - Case No. 05-16304 HRT
Related Case: SCOTT ALLEN RICHTER - Case No. 05-16340 HRT

Dear Mr. Weiss,

As a recipient of unlawful email advertising from OPTINREALBIG.COM, LLC, I believe I am an unsecured creditor in the bankruptcy proceedings. I am interested in joining (or forming) a creditor’s committee and would be willing to actively serve on such a committee.

Even if a creditor’s committee is not created, I would like to file a proof of claim. Please send a form for making such a claim to:

[address]

Also, please add me to your alert list, regarding any relevant dates that might affect my rights.

Thank you for your assistance.

Best Regards,

/s/

***END FORM LETTER***

Edit at will. Postage not included!