Regional chain head hopes to announce new owner before too long

Berean Christian Stores filed for Chapter 11 bankruptcy protection last month, with management at the Cincinnati-based regional chain expressing confidence that the business would continue under a new owner.

Announcing the June 9 move, Berean President Bill Simmons told Christian Retailing he expected a purchase would be completed by the end of July, ensuring that the company would be “adequately capitalized well into the future.”

Details of one bid were included in the papers filled with the U.S. Bankruptcy Court, Southern District of Ohio in Cincinnati, Simmons said, with an auction possible if other interest in a purchase was forthcoming.

Court documents in the Chapter 11 proceedings included a list of Berean’s top 25 unsecured creditors. Totaling almost $6.5 million, the list was headed by Thomas Nelson ($824,000) and rounded out by Union Gospel Press ($74,000).

Simmons said the chain filed for bankruptcy protection after months-long discussions with vendors had failed to secure an agreement for continued operations.

“It’s not the perfect outcome, but we believe that it is the best outcome we can hope for in the situation that we find ourselves in,” he said.

The legal moves mark a big change of fortunes for the chain, that just three years ago started a new chapter in a long history. With backing from private equity from JMH Capital, Berean management bought out the then-16-strong chain—which dates back to 1934—from Standex International Corporation.

The new owners embarked on some rapid expansion, taking on a number of longtime independent stores—among them former CBA chairman Chris Childers’ Macon Christian Store in Macon, Ga.; Wayne Pence’s The Living Water Christian Bookstore in Kokomo, Ind.; and Ward and Anita Wells’ Wellspring Christian Bookstore in Louisville, Ky.

Within a couple of years, Berean had grown to 26 stores but cut that number by a third earlier this year, to18. The closures included the three former stores of Childers, Pence and Wells. Another store in Temecula, Calif., is in the process of being sold.

Simmons said Berean’s troubles began last fall when it presented a restructuring plan to its lenders, whose requirements prompted Berean to take “pre-emptive action” and pay off all bank debts. That impaired Berean’s ability to pay its suppliers.

Since then the company had pursued “multiple avenues” and been in regular discussions with its 160 vendors, Simmons said. “We had an incredibly high level of cooperation from most of the key vendors in our industry,” he said, but it had “not been possible to get everyone on board” with a plan for going forward.

Though Berean had been affected by the economy “it’s not that there hasn’t been positive cash flow.” Berean’s growth had been leveraged on debt that became “a foundation of sand as the economy fell and the lending markets changed,” he said. “I don’t know (if) that was a mistake. There are millions of people who have learned the same lessons across the country.” But there was “certainly a cautionary tale” in what had happened, he added.

• Prev
• Next