Calvert Retail, a Delaware company that owns eight kitchenwares stores, could become the new owner of Chapel Hill’s struggling Southern Season as soon as Monday.
The company was the sole bidder at a bankruptcy sale Friday morning with a $3.5 million bid.
A federal judge approved the sale Friday afternoon and the deal is being expedited to close on Monday.
“We are very close to zero cash. We don’t have enough cash to operate next week if this doesn’t close,” said John Fioretti, the court approved chief restructuring officer for Southern Season.
Calvert Retail owns six Kitchen & Company stores from South Carolina to New Hampshire, including a location in Asheville. It also owns two Reading China & Glass stores in eastern Pennsylvania.
Calvert is buying Southern Season’s flagship store in Chapel Hill, its website, trade names and intellectual property. The Taste of Southern Season stores in Raleigh and Asheville, and Charleston, S.C., will close. There are no immediate plans for changes at the Chapel Hill store.
At 60,000 square feet, Southern Season’s Chapel Hill store is significantly larger than Calvert Retail’s stores, which average between 10,000 and 20,000 square feet.
“It was only two weeks ago that our company understood the sale was possible,” Calvert Retail owner Eric Brinsfield said in a press release. “Right now, we are looking forward to learning and understanding everything that makes Southern Season so special in this market.”
Brinsfield added that Southern Season’s well-known name and synergy with its business make it an attractive purchase. “As a company, we have always admired Southern Season as a leading brand. We were monitoring the situation closely and hoping to get involved with such a great legacy,” he said in the statement. “A large percentage of what Southern Season sells is directly in line with what our stores sell.”
Southern Season was started in 1975 and eventually became a $30 million retail and mail order business and an anchor tenant at Chapel Hill’s University Place mall. However, it never recovered after the 2008 recession and was bought in 2011 by TC Capital Fund, which is led by Chapel Hill entrepreneur Clay Hamner.
Hamner, who became the company’s CEO, tried to replicate the success of the Chapel Hill store with its restaurant and cooking school in Richmond, Va., and outside Charleston, S.C. Those two locations closed earlier this year. Last week, Dave Herman, president and chief operating officer, replaced Hamner as CEO.
The company filed for bankruptcy in late June. At that time, court filings said it had $9.8 million in assets, including $3.6 million in inventory, and $18.3 million in liabilities. Many of those owed money are small artisan food and beverage makers based in the Triangle and across North Carolina. But it is not likely that many of them will see much if any of the money they are owed.
Southern Season had hoped to come out of bankruptcy by the end of the year, having shed its leases for the large closed stores and improved its online store. But the company struggled while in bankruptcy. It secured a $1.4 million loan from Silk Route Capital Corp., which was made up of some of its original investors in 2011, but not as much as it had hoped. The company received only $372,000 from Silk Route, according to court records.
Calvert Retail wasn’t the first company to consider purchasing Southern Season. The Focus Properties, which owns The Siena Hotel in Chapel Hill, had put in the first bid, which was replaced by Calvert Retail’s.
Executives at Calvert Retail aren’t unfamiliar with what Southern Season has experienced with rapid expansion leading to bankruptcy. In 1999, Reading China & Glass emerged from bankruptcy under similar leadership but a new name: Calvert Retail.
Executives told the News Journal in Wilmington, Del., at the time that the company’s financial problems were related to doubling in size in one year. In early 1998, Reading China & Glass had more than $92 million in sales and 34 stores in 15 states; by the fall of 1998, the company filed for Chapter 11 bankruptcy, listing assets of $56 million and liabilities in the same amount, according to the News Journal.
In 1999, Eric Brinsfield’s father, Jay, then the company’s chief executive officer and primary stockholder, bought Reading China & Glass for $3.3 million, according to the News Journal.