We write about bankruptcies at The Deal for lawyers, Wall Streeters and others in the corporate crowd. But a trip to the
Fortunoff store in White Plains this past weekend put in perfect perspective the "other side" of the bankruptcy buyouts I cover almost everyday. The uncertainty of Fortunoff employees I talked to regarding the future of the company stood in stark contrast to the rather certain and all-knowing perspective of the lawyers and bankers that I usually converse with.
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Speaking from behind a glass counter, a woman at the jewelry-repair center of the store told me the in-house jeweler couldn't fix my broken watch (he was no longer doing certain repairs, and wouldn't even polish my watch) and warned me that I might want to send it to the manufacturer myself. She warned that if Fortunoff sent it out, it could take five months to get back. "No one really knows what's going on, or if we'll even be here in five months," she said with candor.
When I asked her if it was because the company was recently sold, the woman looked at me as if I just fired her myself. The $80 million sale of Fortunoff to the private equity firm, NRDC Equity Partners LLC, was news to her, and the four or five employees she called over to tell. In fact, there was soon a swell of activity around the jewelry counter. She said there were rumors the company might be eventually sold, but when I told her I covered bankruptcy for The Deal, she said she didn't even know the company she works for was bankrupt.
Nor did a man that she called over, whom she identified as a manager. The manager even denied the company was sold before hastily walking away. Whether or not the manager was keeping from his employees news that the company was indeed bankrupt and sold, or whether he was truly in the dark like them, I couldn't tell. Soon enough, he admitted they were sold, "but for three times that."
I don't know if this is common in situations like this. How do bankrupt companies communicate with their employees? Do they tell them things straight, or is it a bad case of telephone, where they leave it to chance that workers find out? Doing the latter, of course, can create a huge misinformation gap. And that seemed to be the case in this particular store, which among Fortunoff's most unprofitable.
Perhaps it's needless to say at this point, but I didn't leave my watch there. - John Blakeley
See Fortunoff profile from TheDeal.com Bankruptcy Insider
See TheDeal.com: Fortunoff files for Chapter 11
See Dealwatch: Home furnishing retailers
See Dealwatch: PE-backed bankruptcies
