Pergament on life support, as owners desperately look for new funding

Home Channel News, March 19, 2001

Attorney's comments that company would close called premature by chain's CEO, who wants to keep 10 stores open

MELVILLE, N.Y. -- Pergament Home Centers' bankruptcy proceedings took a chaotic turn late last month, as contradictory comments made by its CEO and its attorney left company watchers wondering whether the chain was even trying to stay open.

Company co-owner and chief executive Robert Arcoro characterized as "premature" comments made by the company's attorney, Deryk Palmer, who told the New York Times that the 31-store retailer would close locations, auction store leases and sell inventory. Palmer said that Pergament's involuntary bankruptcy petition, which was filed Feb. 20 in Central Islip, N.Y. "dashed" any hope for reorganization.

Arcoro and other Pergament officials have, for the past several weeks, refused to respond to requests by NHCN to discuss plans. Arcoro confines his statements to interviews with Newsday, Long Island's leading daily newspaper.

He told that paper Feb. 27 that it remained likely that the retailer would go out of business. But he outlined scenarios that would al low the company to stay open as a 10-unit chain of smaller stores.

* Pergament had to find new financing, possibly through a new investor. (Arcoro and his business partner, Joseph Kadainow, took over Pergament in December 1999.) He provided no additional details of potential investors' identities;

* Great American Asset Management, the Deerfield, Ill., firm which is handling the retailer's inventory liquidation, had to agree to continue supplying certain stores with merchandise beyond its current contract, which expires March 31;

* Arcoro said that a store lease deal could be signed the following week. That deal -- which could find Pergament auctioning leases to other dealers and retaining others if it can come up with the financing -- needed bankruptcy court approval, and would be subject to a lease auction that's scheduled for March 23.

Inability to pay rent on leases is what precipitated the Chapter 11 filing after certain landlords -- including its former co-owner, Murray Pergament -- sued Pergament for delinquent rent.

On March 6, Newsday reported that Pergament had raised $1.9 million in cash from inventory sales. Court approval to use those funds for payroll and store operations was part of an agreement with secured creditors Congress Financial Corp. and Alco Funding Corp.

The five-member unsecured creditors committee selected as its representative Kenneth Silverman of the Jericho, N.Y., firm Silverman & Perlstein Acampora.