Feb. 23 (Bloomberg) -- Ritz Camera Centers Inc., the largest camera-store chain in the U.S., filed for bankruptcy protection, blaming the deepening U.S. recession and the consumer transition to digital photography.
The 91-year-old company, which had sales of almost $1 billion in 2008, has both assets and debt of less than $500 million, according to Chapter 11 papers filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. Ritz sought court permission to tap a new $85 million loan from existing secured lenders.
Ritz has about 800 locations in more than 40 states, including the Ritz Camera chain, Wolf Camera, Kits Cameras, Inkley's and the Camera Shops. The Beltsville, Maryland-based company suffered from a drop in photo printing, as well as slumping sales at its 130 Boater's World Marine Centers, which were hurt by last year’s record oil prices, court papers show.
The advent of digital photography, which ended "enormous profits" from photo finishing, "proved too much of a burden, coupled with the losses experienced by the Boater's World business," Marc Weinsweig, the closely held company’s chief restructuring officer, said in court papers.
Ritz's debt includes $47.7 million on a secured revolving credit agreement and $13.1 million owing on subordinated debentures, court papers show. Including letters of credit, the bank debt increases to $54.5 million. Wachovia Bank NA is the agent for the lenders.
Ritz officials sought to diversify their business by launching Boater's World, a boating-and-fishing supply retailer, in 1987. The stores are located from Maine to Florida and also in Texas, California, Oklahoma, Tennessee and Nevada, according to the unit's Web site. The rise in fuel prices helped lead to a "sharp" drop in sales at the unit's stores, Weinsweig said in the filing.
Ritz in 2001 acquired Wolf Camera, the second-largest U.S. camera-store chain with 500 locations in 20 states, for about $85 million. Wolf filed a liquidating Chapter 11 plan that paid the secured bank lender about 50 cents on the dollar, while unsecured creditors received nothing for their $100 million in claims.
Ritz's 30 largest unsecured creditors without collateral backing their claims are owed about $65.6 million, court papers show. The two biggest unsecured creditors are Nikon Inc., owed $26.6 million, and Canon USA Inc., owed $13.7 million. Ritz owes another $8.4 million to Fuji Photo Film USA Inc., whose affiliate invested about $197 million in Ritz between 1996 and 2001, according to court papers.
Benjamin Ritz opened his first portrait studio in 1918 on the boardwalk in Atlantic City, New Jersey. Twenty years later, Benjamin's younger brother, Edward, opened their first photo processing lab in Washington and later expanded to Baltimore. The company's wider expansion began in 1969 under Edward’s son, David.
The case is Ritz Camera Centers Inc., 09-10617, U.S. Bankruptcy Court, District of Delaware (Wilmington).