32 OF 77 HOUSTON AREA RADIO SHACKS ARE ON THE CLOSURE LIST ALREADY Will that Radio Shack near you be closing, now that the electronics chain has declared bankruptcy? Probably. Of its 4,000 U.S. stores, up to 1,750 appear to be slated to become locations for mobile phone company Sprint. Separately, Radio Shack released on its website a list of 1,784 “potential store closures” — without noting explicitly if the identified locations, listed in 3 separate tranches, were headed for rebranding or outright shuttering. 32 of those stores are in the Houston area. [Quartz; list] Photo of Radio Shack at 4367 Kingwood Dr. (not on the closure list): Ms. Ruby O
COMMENT OF THE DAY: POLLUTION CREDITORS “It’s good to see that the Feds will help clean up the CES Environmental Services site. I’m of the opinion that bankruptcy law should be revised to require that environmental clean-up be paid for before creditors can be paid. It would help in cases like this, but it would also make lenders push dirty industries to clean up their act. Companies with bad environmental records would feel it in their ability to get credit.” [ZAW, commenting on Predicting Houston Real Estate Hotspots; Drinking Water from Lake Conroe] Illustration: Lulu
Back in January of this year, the bankruptcy trustee assigned to colorful imploded homebuilder Royce Homes obtained a $9.3 settlement from Amegy Bank for the bank’s role in what attorneys called a $39 million conspiracy — to swindle creditors by draining the collapsed builder’s bank accounts shortly before Royce shut down and was declared bankrupt, in 2008. A separate settlement with Royce Builders’ founder, Michael Manners, was reached in March. And earlier this month, a jury in federal court returned a $27 million verdict against Royce’s former CEO, John Speer, for his role in the escapade. (Back in March, an earlier jury had ended up deadlocked on a number of charges.)
According to reporting by Law360’s Jeremy Heallen, the charges stemmed from what the attorneys claimed amounted to an off-the-books leveraged buyout of Royce Homes. In 2006, Speer bought Manner’s 50 percent stake in the Royce Homes for $33 million, to give himself complete ownership of the homebuilder. Though the funds used to finance the purchase (including a $20 million personal loan from Amegy Bank) were borrowed in Speer’s own name, Speers, Manners, and Amegy came to an understanding that Royce Homes would ultimately be responsible for paying them off, the suit claimed. The purpose of the scheme, according to the claims, was to keep the loans off of Royce Homes’s financial statements, because doing so would have “wiped out most of the homebuilder’s equity and caused lenders to shut down vital credit lines,” Heallen reports.
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Amegy Bank and More
Residents of the Cambridge Court Apartments at 6500 S. Gessner will get to stay until the end of their leases, but after that they’ll need to find new homes. That’s the word from the complex’s neighbor and new owner, Strake Jesuit. The Catholic boys’ high school is also the property’s old owner; the 7.55 acres the apartments sit on is a portion of the land Strake Jesuit lost as a result of a 1971 bankruptcy. Developer Harold Farb built what was then called the Newport Apartments on the site 6 years later.
School officials plan to tear down the complex “at the earliest possible date” and use the land, which sits just north of the school’s Gessner driveway, for parking and athletic fields. The acquisition will also allow planners to “re-examine where it will construct its new Science and Engineering Building on the campus without a net loss of parking or green space,” the school announced.
Photos: Strake Jesuit (aerial), Apartments.com (Cambridge Court Apartments)
CAMERA STORES CRYING WOLF Didn’t the country’s biggest retail camera chain already declare bankruptcy and close a bunch of its Wolf Camera and Ritz Camera stores in Houston? Yeah, but that was back in 2009; now the successor company is going down that path again, a couple years after bouncing out of bankruptcy protection. In a news release, the company’s restructuring officer makes it all sound like part of a pretty picture: “To achieve our strategic vision of a super-store chain offering unique value-added services . . . it became necessary to implement this vision through a Chapter 11 filing.” Ritz Camera & Image, which has its headquarters in Maryland, is “evaluating which of its 265 stores to close, including at least three stores in the Houston area.” [Houston Business Journal; previously on Swamplot]] Photo of Rice Village store: Wolf Camera
The new owners of the Bennigan’s restaurant chain are hoping to get as many as 10 new Bennigan’s franchises opened in Houston, and they’ve hired a broker to scout for sites. All 20 Bennigan’s in Houston (as well as 6 Steak and Ale restaurants) closed in 2008, after their parent company filed for Chapter 7 bankruptcy. Bennigan’s Franchising Co. is also searching for as many as 10 locations in its Dallas-Fort Worth home base and 5 each in San Antonio and Austin, as well as single locations in other Texas cities. New restaurants will likely look something like the new 4,200-sq.-ft. prototype the company built last fall in Appleton, Wisconsin (above), but don’t necessarily have to be stand-alone buildings, says Daniel Harris of Henry S. Miller Brokerage. Also in development: a fast-casual “Bennigan’s On the Fly” for airports and colleges.
Photo: Real Points
DIGGING OUT FROM HEAVEN ON EARTH Updated task list for the investor group that bought the dilapidated and long-vacant Heaven on Earth Plaza Hotel at 801 St. Joseph Pkwy. at Travis St. Downtown 3 years ago: 1) Pay off $4.2 million mortgage on property; 2) work way out of bankruptcy (declared just last week, to avoid foreclosure); 3) close on $22 million construction loan to redevelop the 31-story former Holiday Inn (and later Days Inn) into an “as economy class as possible” hotel. Meanwhile, New Era Hospitality — the group that bought the property in 2008 from a fund connected to the Maharishi Mahesh Yogi — recently spent around $30,000 to secure the building, after receiving a stream of municipal citations for “dangerous building parts, visual blight, unsecured entrances, and signs of urine and bodily fluids.” The project’s general contractor tells Purva Patel that plans to turn the gutted property into an “upscale” hotel have been scaled back. [Houston Chronicle; previously on Swamplot] Photo: arch-ive.org
YOUR FEEDBACK WAS IMPORTANT TO US The Borders “nothing held back” liquidation sale has brought out a slew of not-so-well wishers to the Galleria store, Jef Rouner finds: “The clerks told us that a pretty significant amount of customers had come in to gloat about the liquidation prices, scold the clerks for bad business practices, harp about how Borders got just what was coming to it, and finally, openly mock the soon to be un-employees.” [Art Attack; previously on Swamplot] Photo: Flickr user e_walk [license]
COMMENT OF THE DAY: BORDERS BIDS YOU ADIEU “Do what I did at my store when they announced it was liquidating in February. Immediately unplug the wi-fi router. Immediately section-off the cafe with caution tape. Immediately move all of the seating off the sales floor. This isn’t the time to lounge around, it’s the time to buy shit and get the fuck out. It’s also not the place to take your morning shit anymore, so make sure to also permanently close the restrooms to the public.” [Chris, commenting on Borders Liquidation Sales Begin]
BORDERS LIQUIDATION SALES BEGIN Starting today: going-out-of-business sales at all Borders bookstore locations nationwide, including the 6 hereabouts: on West Alabama at Kirby, in Meyerland Plaza, in the Galleria, in The Woodlands, Webster, and at IAH. Books-A-Million is in talks with the bankrupt chain to assume the leases and inventory of as many as 30 Borders locations, but none of them are in Houston. The only possible Texas takeover on the list is in San Antonio. [Washington Post] Photo: Pedro Vit
BORDERS SHOWDOWN Only one bid came in for bankrupt bookseller Borders Group by Sunday’s deadline — and it’s from a liquidator. An auction of the company’s assets is scheduled for Tuesday afternoon; going-out-of-business sales could begin as early as Friday. Back in February, Barnes & Noble CEO William Lynch said his company might be interested in taking over a few of the remaining 400 Borders locations. Six of them are in Houston. [Publisher’s Weekly; Lynch statement; previously on Swamplot]
Whatever happened to that Park 8 condo tower, hospital, and strip-mall development planned for Beltway 8 next to Arthur Storey Park, just south of Bellaire Blvd.? The Chronicle‘s Purva Patel surveys the wreckage of the self-styled “Land of Oz”: The highrise project has long been in bankruptcy, the contractor and lender are battling over ownership of the land in court, and 2 different groups of investors and condo buyers are suing developer David Wu for their investment losses (totaling more than $2 million), alleging he has or had no intention or ability to complete the project, and that he misled them about funding and leasing commitments. Neither Wu nor his attorney would respond to the reporter’s questions.
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GULF FREEWAY OUTLET MALL SITE: UP FOR GRABS? A possible complication in those plans to put a new 95-store outlet mall between the Big League Dreams sports complex and the Bay Colony shopping center west of the Gulf Freeway in League City: The Galveston County Daily News‘s Laura Elder reports that the 35 acres of land Tanger Factory Outlet Centers was hoping to purchase out of bankruptcy for $8.7 million will be going up for auction instead in just 10 days. A bankruptcy court ordered the sale last week. Tanger announced the project in January, just days after the Simon Property Group announced its plans to build another outlet center, the 100-store Galveston Premium Outlets, just 4 miles to the south, in Texas City. [Laura Elder’s Buzz Blog; previously on Swamplot] Rendering: Tanger Outlets
HARTS GOING, GOING, GOING . . . TO PRISON Auctioneers and swindlers Jerry and Wynonne Hart will begin serving their 14-year prison sentences “within days,” after an appeals court reversed a decision that would have given the former owners of the Hart Galleries on South Voss a new trial. The Harts pled guilty to “misapplication of fiduciary property” 2 years ago, in return for prosecutors dropping theft and money-laundering charges against them. Prosecutors claim the Harts sold customers’ goods at auction but regularly underpaid or otherwise finagled their way out of distributing the proceeds. [Houston Chronicle; previously on Swamplot] Photo: Hart Galleries
59 BORDERS: THE END Late addition to the Borders Books store closing list: The company’s 27,483-sq.-ft. store at that retention-pond-by-the-freeway shopping center in Stafford, Fountains on the Lake. The Stafford location is expected to be the only Houston-area casualty of the company’s bankruptcy, and is scheduled to close by “late May.” It and 2 dozen other stores around the country were added to the 200-store axe list at the end of last week. [Revised closing list (PDF); previously on Swamplot] Photo: Melissa M.