A Chat with John Economaki, Founder and President, Br
The first thing I did was call the bank and say, "I've got serious issues with my loan covenants. What's going to happen is that Christmas isn't going to happen here. I can tell you this." I told them I wanted a meeting with them in a week, but meanwhile I'm going to do my housekeeping here. So we laid off 85 percent of the staff, and we're a small business. We had 50 employees at the time, and before the month was out, we were down to 13, and that was a stretch. Our sales dropped 90 percent. ... Then the bank told me, don't worry about it John, we're giving everyone a 30-day grace period automatically. And I told them we were seasonal, and 30 days wouldn't do squat. That's not going to happen.
I've always had an upfront and honest relationship with all of my banks. I asked if we could restructure it as a long-term note, and take it out of short term, and they said I couldn't do that. So in January, a few months later, they called me up and said we needed to make progress on this note. I said, tell me how I'm going to do that. I showed them my daily and monthly sales and asked them how. They told me it was my problem.
Finally they told me they were going to sweep my checking account. I said, "Why not just lock the doors?", because I don't have a lot of patience with people who don't understand business. They don't understand that everything's at risk. I'm the biggest loser of all if I don't fix it. What's the point of adding even more pressure? You're doing everything you can. Finally, one of my board members went to the bank and said he didn't feel I was being dealt with properly because we were a 20-year old business with a great track record. But their hands were tied. It's a federally regulated business. So we went into that cesspool of trying to work things out. Then in June of 2002, I met with a shareholder committee and said we were disbanding the corporate charter and handing the keys to the bank.