Matt Teuten/Aurora Photos for NPR
Last December, Bowl & Board owner Mark Giarrusso worked the register at his Brookline, Mass., store. This location is now closed because of the economic downturn.
Last December, Bowl & Board owner Mark Giarrusso worked the register at his Brookline, Mass., store. This location is now closed because of the economic downturn. Matt Teuten/Aurora Photos for NPR
Matt Teuten/Aurora Photos for NPR
Bowl & Board owner Mark Giarrusso made phone calls while at the computer last December at Bowl & Board's Somerville, Mass., store.
Bowl & Board owner Mark Giarrusso made phone calls while at the computer last December at Bowl & Board's Somerville, Mass., store. Matt Teuten/Aurora Photos for NPR
NPR's Tovia Smith is following the economic fortunes of Bowl & Board, a family-owned chain of housewares stores in New England. This is her fourth story about the business. Read the series here.
As Mark Giarrusso will tell you, there are a lot of really hard things about filing for bankruptcy, including getting over the shock that it has actually happened.
"This happened so quick," he says. "I didn't see it coming."
It's true, business was bad at his store in Brookline, Mass. Giarrusso fell behind on his rent. But he was trying to negotiate with his landlord, and he figured the chain was headed for some belt-tightening, not bankruptcy.
"I thought, worst-case scenario, I'd be by myself — the old shopkeeper that comes in and does everything myself," he says. "That was my plan. Just hang in there."
But when his landlord sued him for the nearly $90,000 Giarrusso owed in back rent, and got a court to freeze the store's bank accounts, Bowl & Board was paralyzed. Next thing he knew, Giarrusso was following his lawyers into bankruptcy court.
Coping With Bankruptcy
"We're just basically trying to stay in business," he says. "Let us keep going. Are these hard times? Yeah. But why would you shut this down? Are you going to put everyone on unemployment?"
In court, Giarrusso's attorneys make the case that if his frozen funds are released, Giarrusso can save his other two stores in Somerville, Mass., and Providence, R.I.
And they argue that the landlords would probably get more than enough to cover their back rent.
But the landlord's lawyer, Rosemary Macero, wants the judge to liquidate the business immediately.
"My client was stiffed for a period of over six months," she says, imploring the judge not to let Bowl & Board use the frozen money.
"Once that cash is gone, it's disappeared, and we're never going to see it again because this business is in a failure mode," she says. "There is a significant likelihood that this debtor will not survive the next 30 days."
Macero adds: "I was in the store. I didn't see anything in there that was special or unique."
At the back of the court, Giarrusso squirms in his seat, next to his father, who founded the eclectic housewares chain more than 40 years ago.
"It was obnoxious — the way she spoke," Giarrusso says. "'Nothing special'?"
It lessens the sting just a little when the judge sides with Bowl & Board and orders the money unfrozen. Giarrusso has won the first battle, but the war is far from over.
Reporting To The Court
As a "debtor in possession," as Bowl & Board is now called, Giarrusso and his bookkeeper, Polina Paunova, work overtime to keep up with the countless new reporting requirements and operating rules that they have to comply with. The store cannot so much as redeem a gift certificate now, without reporting it to the court.
"It's a ton of homework," says Giarrusso. In order to avoid liquidation, the business has to prove that it's viable. And this takes him off the sales floor at a time when he needs every sale he can get.
To get things going, he launches a big sale, and gets a decent response.
"I think they put a lot of love into what they buy here," says singer-songwriter Dinah Steward, who's buying a chair and ottoman. "It all has such character and it's so creative."
But Giarrusso knows that even the most loyal customers won't save his business if he can't get inventory. Three weeks after his money was frozen, and five days after the judge ordered it released, the bank has still not freed up his funds.
"They were supposed to cough it up immediately," Giarrusso says. "But what am I going to do? Spend another $1,200 on legal fees to get it today versus tomorrow?"
Pressure From Vendors
Meanwhile, his vendors keep calling, and Giarrusso struggles to explain when he'll be able to send them some money.
"It's hours away from being unfrozen," he says to one. "But it's a little bit of an unknown."
And his inventory is dwindling, hurting his sales even more.
January's numbers are way off, and so far, February is only a tiny bit better.
"This is brutal," says Giarrusso. "She is going to shut it down," he says, referring to his landlord.
Like many retailers, Bowl & Board often operates in the red at this time of year. Sales are down, and Giarrusso is usually spending big to take advantage of deals on new spring merchandise.
This year, he holds off on his buying and considers running another sale. But he worries that proving himself profitable today may cost him in the long run.
"Short-term profitability is easy," he says. "Because you can just chuck it out the door at a discount rate. But I don't want to be a hero today and a loser tomorrow."
Taking A Personal Toll
Several more days pass, and still Giarrusso cannot access his frozen funds. He wakes up one morning to find his BlackBerry has been shut off because he hasn't paid the bill.
"I tell you, I am exhausted," he sighs. "I have been going straight for three weeks."
The stress is starting to take its toll. A 6-foot, 220-pound ice hockey player, Giarrusso is a pretty hardy guy.
But two days before he's due back in court, he crashes.
"He was on the phone hunched over," says store clerk Sara Binns.
"He was dizzy — he was having trouble standing," adds Becky Boguzis, another employee.
When he had trouble breathing, Giarrusso heads for the emergency room. Twenty-four hours and countless tests later, the doctors say he's got an irregular heartbeat, made worse by fatigue. He leaves the hospital and goes right back to work.
"I don't want to talk about it," he says sheepishly as he returns to the store. "Do we have checks to sign?"
Finally, the answer is "yes." The bank has unfrozen his money, and the checks for his new bank account have arrived. So for the first time in a month, Giarrusso can write checks again.
But there is little celebration. On Tuesday, Bowl & Board is due back in court, and the business' life depends on whether it can hit its numbers.