Bible Factory Outlet in Chapter 7

by Lynn Garrett, PW Daily -- Publishers Weekly, 2/28/2007

Christian retail chain Bible Factory Outlet was forced into Chapter 7 bankruptcy last week in the U.S. Bankruptcy Court of Northern Alabama. The company, based in Albertville, Ala., was founded in 1995 and went on an expansion tear in 2004, opening 20 new stores that year. At its peak in 2005, BFO had 70 stores, primarily in the southern states. By 2006 that number had fallen to 55; 31 stores closed this past fall. On February 9, BFO filed Chapter 11, listing assets of between $0 and $50,000 and liabilities of $1 million to $10 million. On February 16, BFO's bank requested that the Chapter 11 proceeding be converted to a Chapter 7, and the court approved the motion on February 22, forcing BFO to close its remaining 24 stores.

BFO president Sam Greenwood said, "The problem wasn't with our vendors—they were willing to work with us—the problem is our bank. It's the relationship with them that is making us go under." Webster Business Credit Corporation of Boston and Connecticut "pulled our funding," Greenwood said, declining to renew the company's loan in September. "They prevented us from making payroll and paying our rents." In its motion, Webster said it sought the conversion to Chapter 7 because it felt its collateral was in "jeopardy of further dissipation and destruction." Responding to a request for further comment, the bank issued this statement through its attorney: "Under the circumstances and given the pending court action, Webster Business Credit Corporation has no further comment."

Greenwood said BFO's biggest vendors were Thomas Nelson, Zondervan, Appalachian Distributors and Dicksons (gifts and church supplies). "We were behind every year with our vendors," Greenwood said, "but we always paid them off."

Greenwood hopes to avoid liquidation, the usual scenario for a company in Chapter 7. "Everything is on hold until the trustee [Rocco Leo of Leo and O'Neal in Birmingham, Ala.] reviews the case," Greenwood said.