Hacketts files for bankruptcy

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November 10, 2009

By KIM SMITH DEDAM The Press Republican Tue Nov 10, 2009, 09:12 PM EST

LAKE PLACID — Patrick Hacketts Hardware Co., which runs a department store in Tupper Lake, filed Chapter 11 bankruptcy Tuesday, two days after closing its Gouverneur store under threat of eviction.

Hacketts Chief Operating Officer Herbert Becker said the filing would not change operations in Tupper Lake or at any of the other three stores the Ogdensburg-based company runs.

“It’s a reorganization process. For the most part, what it means is the debt has been pushed off. This is an effort to remain viable so that we can turn it around.

“Basically, what happens is this stops anyone from doing any more damage to us. Everything stays the same. Chapter 11 protects jobs; it protects payroll.

“The easy way would have been to file Chapter 7, lock the door and walk away. But we’re here to stay. Things have been going well.”

‘MORE Organized’

Becker said the court filing took place at 1 p.m. Tuesday.

“Lawyers will contact all our vendors, and it will take time for the bank to release our account.”

Thomas W. Scozzafava, CEO of Hacketts and Seaway Valley Capital Corp., told the Watertown Daily Times, “It’s been a constant whack-a-mole situation, if you will, which makes us unable to run the company. Bankruptcy protection will allow us to do it in a more organized fashion, albeit more expensive.”

Scozzafava is not related to the Moriah town supervisor with the same name. But his sister is Deirdre Scozzafava, who recently withdrew as Republican candidate in the embattled District 23 Congressional election.

Overdue rent

Chapter 11 is the most recent adjustment in the 150-year-old company’s tumultuous push to restructure operations.

Becker was hired to run Hacketts six months ago, as stores in Watertown, Pulaski and Canton closed following 18 months of rapid-fire expansion.

The Gouverneur site held out until Sunday. It was located on Main Street in space rented from Gouverneur Center Development LLC, which won a judgment against Hacketts late last summer for nearly $150,000 in overdue rent owed, according to business news reports.

The closure Sunday put about 20 people out of work.

Debt owed

Hacketts had leased space in Lake Placid a year prior, amid plans to place a department store in Cold Brook Plaza, but that project has since been sidelined.

Closing locations the company called unprofitable in press releases was connected to a debt-repayment plan.

Six major sportswear creditors had filed involuntary-bankruptcy proceedings against Hacketts in April in an attempt to recoup more than $5 million worth of debt owed on inventory.

The bank note was paid off completely in July, Becker said.

The company just announced the addition of Point Zero merchandise as October came to a close and began restocking shelves.

‘old debt’

But former owners Patrick E. Hackett Jr. and Julianne Hackett Cliff and former CEO Norman Garrelts had filed suit in St. Lawrence County in August for nearly $750,000, plus interest, each in unpaid stock-purchase agreements.

Protection under Chapter 11 provides Hacketts a break in the complex string of financial proceedings.

“This is the old debt,” Becker said. “Prior management purchased and lived way beyond their means. They truly lost sight of what Hacketts was all about.

“In Chapter 11, everything remains the same, only the frustration of dealing with collection agencies or lawyers gets pushed off. Now, it moves into bankruptcy court.”

no rush

Four Hacketts department stores remain in operation, with discussion of revisiting the Canton site.

“We are actually considering reopening the small Hacketts in Canton,” Becker said. “But we’re not going to rush into this the way old management did.”

Currently, the company operates department stores in Ogdensburg and Tupper Lake, a fashion store in Massena and a seasonal department store, opened Memorial Day to Labor Day, in Sackets Harbor.

E-mail Kim Smith Dedam at:

kdedam@pressrepublican.com