Boscov's emerges from bankruptcy
WILMINGTON - It was a rubber-stamp hearing, the kind of thing less-sentimental businessmen have their attorneys take care of. But that's not how Al Boscov rolls. No, the 79-year-old savior of his family's department store chain just had to be here yesterday.
He had a primal urge to see and hear from U.S. Bankruptcy Judge Kevin Gross. He had to personally thank every lawyer. But most of all, Boscov had to witness for himself the end of an ordeal that had broken his heart, almost left thousands unemployed, and nearly ruined the business his once-penniless immigrant father had started a century ago in Reading.
A sentimental man would have cried. Boscov, who turns 80 next week, did.
Moments after Gross approved the company's exit from Chapter 11 bankruptcy and adjourned the hearing, Boscov was asked why he had driven all the way from Reading for a 30-minute technical proceeding in a virtually empty courtroom.
"I wanted to," the notoriously jocular bundle of energy said as his vocal chords seized and his eyes watered.
"You know why," Boscov said. "Because we're alive."
Thirteen months after the family-owned retail chain filed for Chapter 11, and nine months after Boscov himself repurchased the enterprise in an extraordinary rescue that few thought possible in a recession, Gross approved an order that authorized payment of all remaining debts within three days.
The order was significant mostly for its symbolism. The 39-store chain has been running as a new company since Boscov bought it in December in a $307 million bid hailed as a credit to his hustle, smarts, and kind ways.
Yesterday's order effectively retired the bankrupt shell corporation that spent the last year sorting out how much to pay unsecured creditors, owed $90 million when the retailer filed for bankruptcy in August 2008.
"When I came to the first-day hearings, before I left home that morning," Gross said, "my wife said, 'Kevin, don't mess up this case, because everybody loves Boscov's.' "
Throughout the case, the judge said, "I heard that repeatedly. . . . I think it is a testament to all here in the courtroom that this case has been successful. I would start with Mr. Boscov.
"It is the integrity that you brought to your work, the quality of your product, the way you treat your employees and your customers."
Over the last year, Boscov worked 16-hour days to resuscitate the company, which has 7,500 workers in Pennsylvania, New Jersey, Delaware, New York, and Maryland.
He visited stores. Drove to hardscrabble towns where his stores are anchors and persuaded their leaders to back $50 million in federal loans. He kept an eye on every aspect of the business.
"It made a difference, certainly, I think, in the way the various constituencies dealt with the issues that we had at hand," the judge said.
Creditors' attorney Richard S. Kanowitz expressed pride at the way lawyers on all sides worked toward a constructive outcome. He also thanked the judge.
"We really got something done here," said Kanowitz, of Cooley, Godward, Kronish L.L.P. in New York.
The banks that were the retailer's large secured creditors were paid in December, when Boscov bought back the chain at a bankruptcy auction with $97 million in equity and $210 million in financing.
The chain went bankrupt a little more than a year ago, after an ill-timed and costly addition of 10 new stores collided with the sudden downturn in consumer spending brought on by high gasoline prices in spring 2008 and the budding financial crisis.
Boscov was not in charge when the company stopped being able to pay its bills, halting merchandise deliveries. He had retired and cashed out with millions of dollars 21/2 years earlier, after turning his father's single shop into one of the nation's last family-owned department store chains.
His successors, including his nephew, former chief executive officer Ken Lakin, expanded Boscov's to 49 stores after such brands as Strawbridge's disappeared because of industry consolidation.
Those 10 new stores underperformed and were swiftly liquidated after bankruptcy to help get the company's finances in order, said Bradley Erens of the Chicago law firm Jones Day, who guided the chain through the bankruptcy process.
The judge said the chain's survival was no small feat, given how few retailers come out of bankruptcy intact.
Erens agreed. "A lot of retailers have liquidated, and we're lucky we didn't have to do it," he said after the hearing. "Al Boscov did a great job."
Under the plan approved yesterday by Gross, unsecured creditors will be paid 6.5 cents to 15 cents for every dollar owed at the time bankruptcy was declared, he said.
Before signing off, the judge wished Boscov's "all the best."
"I hope, indeed, that I'll never have Boscov's back in court," he said, "and I'm sure that I won't."
Boscov shook his head at the thought. Then he did what he came here to do:
"Thank you, your honor," he said.
Stores: 39 in New Jersey, Pennsylvania, Delaware, Maryland, and New York.
Chief executive officer: Albert Boscov, son of the founder.
Founded: In 1911, by Solomon Boscov.
SOURCE: Boscov's Department Store L.L.C.
Go to http://go.philly.com/boscov for previous coverage of the Boscov's bankruptcy.
Contact staff writer Maria Panaritis at 215-854-2431 or email@example.com.