Bernie's store closings OK'd by bankruptcy court

U.S. Bankruptcy Court in Hartford approved today an application by Bernie’s Audio Video TV Appliance Co. Inc. to close its 15 stores in Connecticut, Massachusetts and Rhode Island and begin liquidating its inventory as part of a Chapter 11 bankruptcy filing.

"The store clearance sale starts today," bankruptcy attorney Barry S. Feigenbaum said this afternoon, a few hours after appearing in court for Bernie’s.

Bernie’s outlets and warehouse are expected to close by the end of February, most likely in a staggered manner as inventory is liquidated. The liquidation will not include any properties, since Bernie’s leased all its sites, including its warehouse and company headquarters in Enfield.

The court filings Friday included plans to ensure Bernie’s 350 employees continue to be paid and receive benefits until their stores close. Plans also call for customers to be able to retrieve deposit and gift-card money.

Bernie’s also said that manufacturers’ and extended warrantees would be honored. People should either contact manufacturers directly in case of problems, or call a third-party insurer of warrantees whose number should be on labels attached to the products.

Feigenbaum said Bernie’s chief executive officer, Milton Rosenberg, son of company founder Bernie Rosenberg, made a substantial financial contribution out of his personal funds to make sure customers and employees didn’t lose any money.

"You just don’t see that in today’s environment," he said.

State Attorney General Richard Blumenthal applauded Rosenberg’s actions, pointing out that "today’s court action means that consumers will have an opportunity to redeem a total of as much as $200,000 worth of unused gift cards before Bernie’s liquidates its assets."

Bernie’s has about 200 creditors, Feigenbaum said, including Citizens Bank, which is owed a little more than $12 million. Feigenbaum said the bank is not likely to be repaid in full.

It was Citizens Bank’s refusal to extend more loans to Bernie’s that eventually led to the Chapter 11 filing, Feigenbaum confirmed.

"Because of the company performance, it was in default on its obligations," he said. "The bank was unwilling to continue to provide support."

A listing in bankruptcy-court documents of Bernie’s top 20 creditors other than the bank shows GE Money Bank of Salt Lake City, sponsor of the company’s in-store credit cards, at the top of the list, with claims of more than $730,000. Feigenbaum said the amount represents what Bernie’s owed to GE Money Bank for early termination of the two companies’ credit-card agreement.

Other top creditors and the amounts owed were: Toshiba, $509,000; Monster Power, $298,000; Haier America Trading, $250,000; and Serta Mattress, $198,000.

Most of the top creditors were manufacturers of products used in Bernie’s stores, including Electrolux, Ashley Furniture, Bose, Whirlpool, Techcraft Manufacturing and LG Electronics USA. Media outlets also were on the list: The Hartford Courant, owed $159,000 for advertising; The Providence Journal, $59,000, and WFSB radio, $49,000.

A meeting of creditors is scheduled for Feb. 22 in New Haven.