June 20---Blaming “intensive competition,” Art Leather Manufacturing Co. Inc., filed for bankruptcy on June 13 in New York.
In its Chapter 11 petition, the popular wedding album maker and distributor listed assets of $3.2 million and debts of $11.8 million. But it may not be too late to close the gap. On Friday, the Hicksville, New York-based company won permission from the bankruptcy court to tap a $4 million loan from Merchant Financial Corp. to keep its doors open as it tries to restructure.
The U.S. Bankruptcy Court in Manhattan on Friday issued an interim order, allowing Art Leather to start borrowing under the loan until a hearing takes place on June 28.
The loan rolls up $2.8 million in secured debt previously held by lender JP Morgan Chase Bank. Merchant Financial bought Art Leather's debt from Chase earlier this month, according to court papers.
The company, which has a manufacturing facility in Tijuana, Mexico, entered into an out-of-court composition agreement with its unsecured creditors in March 2005. The company defaulted after making the first payment and also defaulted on a forbearance agreement with its secured lender.
In a statement on its Web site, Art Leather only announced a disseverment of its relationship with Seldex Artistic Albums. “Art Leather will no longer be the distributor for Seldex Artistic Albums in the United States and Canada. By mutual agreement the relationship will end on June 1, 2007,” it read.
“Seldex is currently restructuring their distribution network, however, in the immediate future orders can be placed directly with Seldex Artistic Albums,” it added.
Many blogs were buzzing this week as professional photographers were surprised by the confirmation of the rumors and were wondering how they would be affected.
In business for more than half a century, Art Leather is known for supplying first-rate albums directly to professional photographers around the world.
Representatives for Art Leather were not able to be reached by press time.