Value Merchants files for chap. 11

Discount Store News, Jan 3, 1994

MILWAUKEE -- Value Merchants, parent to Everything's A Dollar and Toy Liquidators, filed for Chapter 11 protection from its creditors last month and will close at least 100 dollar stores while trying to sell the toy chain.

Value Merchants said it expects to complete the sale of Toy Liquidators, which it put on the sale block last year, and its Wisconsin Toy wholesale division, by the end of February. It will have to secure the court's permission to sell the toy company.

The closing of 100 under-performing dollar stores, which include Everything's A Dollar, Buck Boutiques, Play Outlets and $5 and $10 stores, was slated for immediately after the Christmas '93 selling season as a way to improve the company's working capital position, according to the bankruptcy court petition filed Dec. 13 in U.S. Bankruptcy Court for the Eastern District of Wisconsin.

The document noted that the exact number of EAD stores to close will depend on the final sales results of the holiday season.

Value Merchants also stated in its bankruptcy petition that it is "contemplating" the consolidation of its distribution centers to two locations, Indianapolis, and Atlanta, sometime in 1994. Last year, the company closed its DC in Tracy, Calif.

According to court documents, Value Merchants filed two petitions, one for itself and the toy companies and another for Everything's A Dollar, excluding its stores in Puerto Rico. The petition covering the former listed total assets through Oct. 30, 1993 of $122,771,000 and total liabilities of $121,628,000. Everything's A Dollar and its subsidiary dollar stores listed total assets of $154,809,000 and total liabilities of $188,884,313.

Everything's A Dollar is the largest chain in the single-price closeout retail sector with 427 units. Sales in 1992, the most recent figures available, were $250 million, double the size of its nearest competitor, Dollar Tree Stores, and nearly double its own 1991 sales.

On the other hand, Toy Liquidators is the smallest of the remaining large toy chains, at 117 units, and the only major company specializing in closeouts, overruns and liquidated merchandise. Its sales for 1992 were $114 million, up 6% from the previous year.

A sales picture of 1993 is still incomplete. The company's fiscal year ends this month.

The bankruptcy petition obtained by DSN listed 20 of Toy Liquidators' largest unsecured creditors and two of EAD's largest.

The company with the largest claim against Toy Liquidators is Firstar Trust Co., Milwaukee, with a claim of just more than $8.7 million, followed by a $7.5 million claim filed by First Bank (N.A.), also of Milwaukee. Both provide Value Merchants with bond financing.

Equipment financing claims were filed by six companies, with claims of between $333,331 and nearly $2.8 million.

There are 11 trade creditors, the largest of which is Playskool, Inc., a division of Hasbro. Playskool's claim is for $1,129,943. Hasbro is next with $828,640, followed by Sega of America, $761,076; Tyco, $749,947; Mattel, $565,954; Lego, $518,360; Milton Bradley (a Hasbro subsidiary) $479,362; Ertl, $457,158; ARCO, $410,812; Playtime, $211,128; and Fiesta Concessions, $183,799.