Mary Beth West has been on the retailer’s board for 10 years.
Updated bankruptcy filing reveals sales dropped 64% from 2008 to 2010.
Ritz Interactive Inc., which filed for bankruptcy in August, has submitted a plan for reorganization. But the U.S. Bankruptcy Court for the Central District of California won’t rule on the final plan until December, according to a new bankruptcy filing.
In the filing, Ritz Interactive, No. 171 in the Internet Retailer Top 500, would reorganize the company as a Delaware limited liability corporation that would be controlled by Ritz Interactive’s biggest creditors, including Ritz Camera & Image LLC, which is owed about $3.5 million.
Ritz Camera & Image is the new company that was formed after Ritz Camera emerged from a Chapter 11 backruptcy reorganization in 2009. After financial problems for Ritz Interactive accelerated, Ritz Camera & Image in May 2010 offered to make further financial accommodations to Ritz Interactive including amending the operations agreement,
distinguishing between payment terms on pre-existing debt and future balances and eliminating handling and licensor fees and mark-ups on inventory, according to the bankruptcy filing. But as revenue and income declined Ritz Interactive was still unable to keep up its payments to Ritz Camera & Image, its biggest supplier. "Despite these accommodations, the debtor has not been able to remain current on its payments to RCI and continues to experience financial difficulty," the filing says.
The new top management of Ritz Interactive would include key executives from Ritz Camera & Image such as CEO Stephen LaMastra, chief financial officer Tom Hermann and general counsel Jeff Israel. “The reorganized debtor will be managed by its sole member, RCI,” the filing says. “RCI has agreed to accept 100% of the equity in the reorganized debtor and to continue to operate and pay the allowed claims of the vast majority of the debtor’s trade vendors.”
Under a timetable submitted to the bankruptcy judge, the reorganization plan would be circulated to Ritz Interactive’s primary creditors who would have until Nov. 25 to vote to approve, modify or reject the plan. The timetable sets Dec. 6 as the date for a final court decision.
Ritz Interactive isn’t talking publicly about its reorganization petition. But the updated bankruptcy filing does reveal a company with severe financial problems. At the time it filed for bankruptcy Ritz Interactive listed assets of $809,192 and liabilities of about $7.2 million. The updated filing shows that total revenue declined 64% from about $107.2 million in 2008 to about $38.6 million in 2010. Net loss in 2010 was about $1.6 million compared with net income of about $2.4 million in 2008.
As of Aug. 29, Ritz Interactive had total assets of about $850,000, including $650,000 in cash, $50,000 in accounts receivables, $110,000 in professional retainers and $40,000 in furniture, fixtures and equipment.
In court papers Ritz Interactive says its revenue began to drop in 2009 because of the severe recession. Over time cameras from manufacturers such as Canon USA cut back on shipments to Ritz Interactive. The recession also caused Ritz Interactive to close down BoatersWorld.com, which at one point generated annual web sales of about $13.5 million.