Calling it an "exciting" day, the new leader of Joseph-Beth Booksellers on Wednesday promised that customers will continue to enjoy what they always have about the store and benefit from new investment.
Mark Wilson, who was previously chief operating officer, is now president and CEO of the company that received tentative court approval Wednesday to operate the Joseph-Beth stores in Lexington, Cincinnati and Cleveland. All that awaits is the filing of the order and approval by Judge Tracey Wise, who gave her preliminary OK during the hearing in bankruptcy court in Lexington.
Wise's approval signaled what will soon be the end of a nearly six-month bankruptcy that will see the new owners of the five auctioned stores take over Friday.
Wilson said the three Joseph-Beth stores remaining will thrive out from under "the burden of debt." He described key initiatives that previously couldn't be implemented because of expenses. Among them is a likely improved point-of-sale system that would better manage inventory.
There will also be a better selection. "Our inventory levels have been dwindling through this bankruptcy process," he said.
"We know where our gaps are, and we're looking very quickly to fill those holes and expand some of our product offerings," he said. The three stores will retain the Joseph-Beth name.
Wilson and Joseph-Beth's current management team, except founder Neil Van Uum, will be leading the company.
"I'm extremely happy, and I look forward to the challenges we have in front of us," Wilson said.
An unexpected end
Wednesday's results were far from what was anticipated when the 25-year-old Joseph-Beth company and its nine stores entered bankruptcy protection Nov. 11 after five years of declining sales.
Van Uum expected to exit bankruptcy after closing a handful of underperfoming stores, but Joseph-Beth and its creditors could not come to an agreement, despite the closing of four locations. The solution was the chain's five remaining stores would have to be auctioned.
He lined up financing support from landlords, including the management of The Mall at Lexington Green, where he co-founded the regional chain in 1986. But just days before the auction, the mall's management pulled support and announced they would bid against him, Van Uum has said.
On Wednesday, details finally came of the results of last week's auction.
The highest bid, entered by the mall-affiliated Booksellers Enterprises LLC, was for $2.794 million for the stores in Lexington, Cincinnati and Cleveland and the corporate headquarters in Cincinnati. That bid included $2.604 million in cash plus various other non-cash items such as assuming the value of gift cards, which will continue to be honored.
Van Uum's losing bid for four stores totaled $3.281 million, including $3.021 million.
After including bids by other parties for assets not included in the Booksellers Enterprises or Van Uum bids, the total value of the bids was $3.977 million with Booksellers Enterprises as the lead bidder and $3.801 million with Van Uum as lead bidder.
The Cleveland location's landlord, the Cleveland Clinic, had previously objected to Booksellers Enterprises' bid, but withdrew that objection Wednesday.
'Very difficult' auction
In total, there were six bidders, three who intended to continue operating stores and three from liquidators who would close them and sell off the inventory. The third bidder who intended to operate a store planned to bid on only the Joseph-Beth location in Fredericksburg, Va.; that bidder was not identified.
"It was a very difficult auction," said Kim Lewis, attorney for Joseph-Beth, noting that no bids in the seven-hour auction were identical.
Booksellers Enterprises bid for only three stores, while Van Uum bid for those three and the company's Davis-Kidd Booksellers location in Memphis.
The latter, along with the Fredericksburg location, was bought by the Gordon Brothers liquidation company for a bid of $672,000 for Memphis and $520,000 for Fredericksburg.
Van Uum has since struck a deal to continue operating the Memphis store, though.
The company that Van Uum had created to bid on the bulk of Joseph-Beth's assets has changed its name to DK Booksellers and will acquire the Memphis store from Gordon Brothers without a going-out-of-business sale ever occurring. Bankruptcy filings noted that the store cannot continue to be called Davis-Kidd Booksellers because that trademark was sold to Booksellers Enterprises.
Van Uum said after Wednesday's hearing that the deal came together because the Memphis landlord was a "man of principle" who "had great faith in me."
When asked for his thoughts on how the bankruptcy turned out, he sighed and said, "It happens."
The company's Fredericksburg location will be liquidated by Gordon Brothers, but the space is expected to then be taken over by the Books-a-Million chain.