Vann's gives 60-day closure notice to employees

2012-09-20T06:00:00Z 2012-10-31T09:21:20Z Vann's gives 60-day closure notice to employeesBy ROB CHANEY of the Missoulian
September 20, 2012 6:00 am  • 

Vann’s Inc. gave its Missoula employees 60-day layoff notices on Wednesday, signaling the end for the 51-year-old electronics and appliance store.

“We’ve been trying to restructure under Chapter 11 (bankruptcy rules) and we have an obligation to let the judge know that unless somebody is willing to put in $3 million to $5 million for inventory, we can’t do it,” Vann’s chief executive officer Jerry McConnell said Wednesday evening. “So we are requesting conversion to orderly liquidation under Chapter 11.”

The company employs about 150 people in six stores, including 85 in its flagship and On Store in Missoula. Its other operations are in Kalispell, Hamilton, Bozeman and Billings, plus a warehouse in Lolo. Missoula resident Pete Vann started the appliance store in 1961. It was sold to employees in 2005.

All Vann’s stores will be closed.

Federal law requires businesses to give a 60-day closure notice if they employ more than 50 people; thus, the formal layoff notices given to Vann’s employees in Missoula. McConnell said workers at the other stores will be laid off on the same schedule.

McConnell said the business needed additional investment to buy inventory and remain a going concern after losing a major line of credit in June. Although it secured some financing after filing for bankruptcy on Aug. 5, he said sales weren’t strong enough to continue.

“The industry in its entirety is in a huge state of flux,” McConnell said. “Two or three years ago, one-third of our sales were flat-screen TVs. Now, 80 percent of that market is saturated. Household incomes are back to 1995 levels. People aren’t splurging on things like they have in the past. Our appliance sales come because the washing machine broke and you need one, not because of new house sales.

“If the market was as it was five or six years ago, I think we could have enticed investors to provide that amount of money. But they’re concerned about their returns, too. Look at Best Buy and Circuit City. They’re struggling mightily, and they’re 20 times our size.”

Vann’s stores will remain open as usual while the company submits its liquidation plan to a bankruptcy judge. McConnell said he expects a decision by Oct. 2, after which it will begin winding down in earnest.

The preferred method would be for Vann’s employees to sell the remaining stock through the stores and the company’s online sales site, McConnell said. The judge also could turn the process over to an outside liquidation firm, similar to the way Missoula’s Kmart and Macy’s stores were emptied.

“We won’t be doing any big liquidation sale until we get through the process with the court,” McConnell said. “And we won’t do anything crazy. We’re still obligated to deliver certain earnings. We can’t go sell everything for $50 and get rid of it.”

If the court allows the company to manage its wind-down, McConnell said it would take until around the end of November to unload all the current inventory. He said he’d like to have enough to last through the Christmas season, but the bankruptcy rules wouldn’t allow him to bring in additional stock.

The layoffs should not affect the future of Vann’s online sporting goods outlet, McConnell said that is close to being sold to an outside buyer and is not enmeshed in the bankruptcy.

The company’s Chapter 11 petition says it owes between $10 million and $50 million to between 1,000 and 5,000 creditors. It lists more than $17 million in company assets, including nearly $12 million worth of inventory at its Brooks Street headquarters.

McConnell joined the company in June after a series of bad investments and poor economic conditions prompted the departure of CEO George Manlove. McConnell’s consulting business, PSS Consulting Inc., recently helped Ronan-based Jore Corp. recover from bankruptcy and oversaw the eventual sale of Missoula-based Spectrum Products LLC.

Missoulian reporter Jenna Cederberg contributed to this story.

Copyright 2015 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(22) Comments

  1. pose
    Report Abuse
    pose - September 27, 2012 3:06 pm
    thanks jdowe, many people don't realize that the laid off employees in all probability will also lose the majority of their retirement nest egg when an employee owned esop company ceases operations.
  2. JDowe
    Report Abuse
    JDowe - September 25, 2012 5:56 am
    This is not a political debate or a place to express your opinion on their services. This is about 150 people that are losing a good job through no fault of their own. They are victims of poor management but still had the faith and strength to try to help make it work. That alone speaks of their strong character and dedication. Great people that deserve a chance. The lack of compassion seen here is proof of a society that cares only about themselves and very little of others.
  3. Joemt
    Report Abuse
    Joemt - September 21, 2012 4:24 pm
    I will not miss a customer, always received bad customer service. Last thing I purchased was a new washer and dryer w/ a stand which they scratched the heck out of installing and refused to replace. Ethics and honesty not their mo on any level.

    All I have to say is Nice business plan! Good riddance as far as the co goes...sorry for the people who are loosing their jobs, that is sad. :(
  4. dsrobins
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    dsrobins - September 20, 2012 2:31 pm
    Vanns certainly won't be missed. They've had high prices, poor quality and lousy service for the past 15 years. You can get far better deals elsewhere.
  5. Legacy
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    Legacy - September 20, 2012 10:55 am
    Another glaring over the top entitlement: If you view the public bankruptcy filing disclosure you will see that while the company was suffering a huge financial loss for 2011, he rewarded himself with an $80,000 Christmas bonus on top of his $21,000 monthly salary during the Holidays 2011. Also during this timeframe his daughter was also rewarded with a $9,000 consulting fee for being creative. Employees were being laid off or reassigned, wages were frozen, stores considered for closure, revenues are declining, yet this entitled executive was profiting. Can you imagine what else had been going on over the years under his leadership?
  6. Nick D
    Report Abuse
    Nick D - September 20, 2012 9:09 am
    Pistol clearly doesn't understand "trickle down" economics. Believe me, supply-siders from the Chicago School never once had forest workers in mind when devising this plot to loot the Americas.
  7. McLagman
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    McLagman - September 20, 2012 9:02 am
    Will democrats be rushing to bail them out with free taxpayer money, or do 60 employees not constitute a big enough voting block to pay off?
  8. Proud American
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    Proud American - September 20, 2012 8:35 am
    What ever the reason they are going out of business. Sure hate to see another large business fall. More lost jobs! It is a shame...
  9. yawn
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    yawn - September 20, 2012 8:18 am
    It will be interesting to see how much PSS Consulting makes in the end.
  10. Andy B Hammond
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    Andy B Hammond - September 20, 2012 6:33 am
    I guess the Missoulian editorial encouraging everyone to shop at Vanns didn't work out so well...
  11. Pistol
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    Pistol - September 20, 2012 6:21 am
    I know what the theory of trickle down economics is/was. In this case I was stating the lose of good paying jobs result in less consumer dollars. Thus firms like Vanns sales drop. The reason trickle down economics didn't wprk during the Bush administration was two. One an unfinanced wae or wars, and NAFTA and GATT. The wars drained the budget, and NAFTA and GATT took our good paying manufacturing jobs overseas. Which is double shame because the traditional party of labor President signed it into law. Bill Clinton!Trickle down worked under Reagon, but no wars, and no NAFTA and GATT.
  12. NYCgrizFan
    Report Abuse
    NYCgrizFan - September 20, 2012 5:26 am

    I think you're confused about what "trickle-down-economics" means. TDE refers to the belief that providing tax breaks to the wealthy will eventually trickle down to help the poor and the overall economy. It seems rather evident that this is not the case. Simply look back to the Bush era tax cuts and previous major tax cuts. I think you'll be hard pressed to find an economist who thinks that works. In short, tax cuts for the wealthy do not cause them to go out and generate demand for goods and services.

    Demand can be spurred by policy, at least to a degree. When we invest in infrastructure, schools, and provide incentives to keep jobs here vs. hiring overseas labor, we see increase in demand. That is the theory behind a stimulus, and we've seen that work. Look back to the demand that was generated (from New Deal policies) to emerge us from the Great Depression. Or more recently, look to the recent stimulus packages that may have saved us from a Depression. When we invest in our own economy, we generate growth, and ultimately increase our tax base as well.

    Trickle-Down policies diminish our tax base, and ultimately force us to cut spending, limit growth, increase the deficit (see Bush era), and put us in a hole like we are in now that will take a long time to get out of.

  13. Legacy
    Report Abuse
    Legacy - September 19, 2012 10:33 pm
    Janice - you hit the nail on the head. George ran amok with his "Blue Oceans" vision and rejected the direction the board of directors gave him for prudent fiscal business directions. He purposely made decisions on his own without the best interest of the employee owned company. His personal gratification was his only interest and he used company assets for whatever he decided he wanted. A new Porsche Cayenne every year is just one example of entitlement. Building spec homes at the Rock Creek Cattle Compnay being another. He talked the BOD into approving him to return to school for two years to pursue an MBA, all inclusively paid for by Vanns. This was suppose to allow him to run the company using his newly acquired business skills once he returned after being gone from the company for 2 years. This entitiled excecutive floated around at 45,000 feet while the company needed a hands on everyday leader who had the long term success of the company in mind. He breached his fiduciary responsibilies of this once great company and ran it into the ground. Now hundreds of current employees are going to be out of work, employee owner retirement stock worthless and thousands of creditors left unpaid. His MBA pursuit worked well.
  14. Industrialist
    Report Abuse
    Industrialist - September 19, 2012 9:41 pm
    It's not too fun when you lose all your financial support. The same fate happened to another company Mr. McConnell was involved with in the Bitterroot Valley. What goes around, comes around. Bad karma!
  15. naps
    Report Abuse
    naps - September 19, 2012 9:30 pm
    You guys this was just a poorly run business. This particular business was a flagship for locally owned business with locations in several MT cities. They stayed open and grew inspiite of themselves in the last few years after Pete bowed out. When the economy went south and the had to compete efficiently with the big boys online, that's when they couldn't hold it together. they made some bad decisions (sporting Goods and the Apple Store in the mall) and the couldnt recover. The economy called their bluff and they fell short.
  16. DJR
    Report Abuse
    DJR - September 19, 2012 9:27 pm
    Mostly correct. While the economy does play a role, it has more to do with while Vann's was unable to secure financing to continue. It has no role in why the company began faltering the the first place.
  17. Larry Lewis
    Report Abuse
    Larry Lewis - September 19, 2012 8:51 pm
    Too bad. The end of a great local business. Pistol makes a good point. When certain political parties work relentlessly to shut down good paying, natural resource jobs; there is no money for the big screens. Montana is becoming a service industry state. No good jobs-just minimum wage service jobs waiting on the out of staters who made their money somewhere else and relocated here. We've become Aspen. Hippies ruin everything.
  18. naps
    Report Abuse
    naps - September 19, 2012 8:40 pm
    Very bad new. But Pistol, you know not what you are talking about. This has very little to nothing do with the local economy. It isn't that simple. Few things are.
  19. skibum
    Report Abuse
    skibum - September 19, 2012 8:38 pm
    Why make the big fuss over Vanns??? Heck, many Missoula family owned businesses have closed their doors as of late and not a word was mentioned.
  20. Andy B Hammond
    Report Abuse
    Andy B Hammond - September 19, 2012 8:24 pm
    Not a surprise. I called it when I saw the first article months ago. A poorly run company
  21. Pistol
    Report Abuse
    Pistol - September 19, 2012 6:44 pm
    Those who don;t believe in trickle down economics should now. Shut down good paying jobs in the lumber and other industries eventually effects the retail market. There isn't enough jobs in the offices of the anti natural business crowd to generate buying power to keep retail a float. Come November we had best elect those who believe in manufacturing, and private industry jobs.
  22. LynnB
    Report Abuse
    LynnB - September 19, 2012 6:27 pm
    This is such sad news. Loss of a Missoula landmrk business.
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