COURT OK’S JOAN & DAVID MOVES
Byline: Vicki M. Young
NEW YORK — A Manhattan bankruptcy court has approved agreements by members of the Helpern family to reduce their compensation and end certain employment agreements with Joan & David Helpern Inc.
The court order was signed on Friday, but wasn’t immediately available.
As reported, the footwear and apparel firm filed for Chapter 11 bankruptcy court protection on March 9.
Under the terms of the order, Joan Helpern, the creative force behind the firm, agreed to reduce her annual salary to $225,000.
Her husband and co-founder, David Helpern Sr., agreed to reduce his salary to $62,500. David Helpern Jr. reduced his annual take to $162,500. All three agreements have an effective date of April 1.
Ann Helpern, whose employment with the firm ended on April 21, had her salary set at $150,000. Elizabeth Helpern’s employment ended on April 6, but her annual salary was not listed in the court order.
The order said that the Helpern family members also agreed to limit their claims for any severance compensation to which they might be entitled, while David Jr. and Ann agreed to make all future payments on cars that were leased for them by the firm.
The two also negotiated the right to exercise purchase options when those leases expire. Additional court documents regarding their responsibilities at the family firm were not available.
On Monday, the bankrupt firm asked for court permission to extend the time to file certain required financial schedules and statements.
According to the court document, Joan & David suffered a cash crunch due to “significant losses from operations because of excess production commitments and inventory, coupled with a decline in Asian consumer demand associated with economic problems in the region.”
Last month, the firm received court approval of its debtor-in-possession financing facility, which allows for up to $15 million in borrowings.
Joan & David said in the court document filed on Monday that its has “numerous liabilities, including trade payables and certain other unsecured obligations, as well as extensive contractual relationships.”
An initial extension was granted the day after the Chapter 11 filing, but that extension is set to end on May 10.
Joan & David estimates that it needs at least a 30-day extension.
The company said it needs more time to compile the information because of staff changes as part of its restructuring efforts, as well as time spent fulfilling information requests by creditors.
Since the filing, the firm’s controller and assistant controller have left the company, and it has hired a new chief financial officer.
In another development, the bankruptcy court on Thursday gave the nod to a joint venture between Garcel Inc., which does business under the name Great American Asset Management, and Hilco Trading Co. Inc. to conduct inventory clearance sales.
The sales, which are at eight boutiques and four outlets in “non-core” and “underperforming” locations, were set to start on Friday because the “level and the mix of the inventory are deteriorating rapidly,” according to an affidavit filed with the court by Harvey Yellen, president of Garcel Inc.