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Creative Memories Parent Company Antioch Files Chapter 11 Bankruptcy Again

Creative Memories parent company The Antioch Company filed for voluntary Chapter 11 bankruptcy protection yesterday (April 16th) for the second time in less than 5 years. Petitions are also pending for the company’s six subsidiaries and affiliates. The cases are being handled jointly by the court.

The company had previously filed Chapter 11 bankruptcy in November 2008. That bankruptcy case was closed in early 2009, but a lawsuit brought by former employee shareholders who lost their retirement in the bankruptcy is still pending against various company executives.

According to the bankruptcy filing, The Antioch Company has in the range of $10 million to $50 million in debt, and in that same range of assets. The company claims to have somewhere between 10,000 and 25,000 creditors – a huge number (even for a corporate bankruptcy) that is obviously swelled by Creative Memories’ large network of consultants. The company has more than 20,000 consultants worldwide, and any consultant still owed a payment on the date of the bankruptcy filing is now a creditor of the company.

Among the top 30 unsecured creditors of the company, some names are familiar to those in the scrapbook industry. Adhesive manufacturer 3L is owed $350,000. Nancy O’Dell, through her company Nancy O’Dell Enterprises, is also owed over $260,000, presumably for the work she did on her signature line for Creative Memories. As in the previous bankruptcy, the majority of the company’s top 30 unsecured creditors are listed as “benefit plan participants”, meaning they are former employee shareholders who are owed buy-outs of their shares after leaving the company or being laid off.

As part of their bankruptcy filing, The Antioch Company also filed several “first day” motions requesting orders they need from the court to continue operating while in bankruptcy. Most of the orders are fairly routine, requesting access to bank accounts and other assets and the right to continue paying payroll. Two motions stand out, however.

One is a request that the Bankruptcy Trustee in control of the company’s assets be ordered to release the approximately $2 million balance in a “rabbi trust” that was being used pre-bankruptcy to fund the company’s deferred compensation plan for consultants to the company to fund ongoing day-to-day operations post-bankruptcy. Since the deferred compensation plan functions as a pseudo-retirement plan for consultants, this request rings echoes of the retirement of the former employee shareholders disappearing in the company’s previous bankruptcy. The second motion requests that certain vendors be designated as critical by the bankruptcy court because the company needs them to continue doing business, which would allow for the company to pay those companies’ bills. The list of vendors the company has requested the designation for includes shipping companies and some of its product supply chain, including adhesive supplier 3L.

There is also a first day motion to allow the company to continue paying its consultants.

Hearing on all of the first day motions will be held tomorrow, April 18th, at 1:30pm in room 2B of the Federal Courthouse in St. Paul, Minnesota.

Can the company recover from this? Creative Memories’ sales have suffered in recent years from growing competition in the scrapbook marketplace from local stores and the internet. The viability of the company’s survival under the 2008 bankruptcy plan relied on unrealistic predictions of the company’s sales increasing, particularly in the digital segment that the company had been aggressively pursuing. But the company’s attempt to enter the digital segment and find a new market there has fallen flat. In the new filings, the company blames stiff competition in the digital market, in particular from Shutterfly, and a declining scrapbook industry, for their inability to make the 2008 bankruptcy plan viable.

According to the St. Cloud Times, the company laid off 70 employees at its Minnesota headquarters when it made the bankruptcy announcement yesterday, nearly a third of the company’s staff. One of the laid-off employees, technical support specialist Rene Fuentes, told the St. Cloud Times that the company is in the process of restructuring its product line and slashing it to only about 50 items, down from 350, to concentrate on its core business. This is backed up by background statements in the bankruptcy court motions:

The Company believes that this bankruptcy filing will provide it the opportunity to reestablish the Company’s core business by exiting certain lines of business and focusing on a smaller product line of photo solution products geared to a broader customer base. Combined with a much simpler and easier business model for the Consultants, the plan will seek to provide creditors a substantial recovery in cash and/or equity in the reorganized company.

Fuentes was very pessimistic about the company’s future to the Times, though, describing Tuesday’s actions by Creative Memories as a “Hail Mary” and saying that “They’re trying to do whatever they can to save the company from shutting down. I hope they make it, but I just don’t see how they’re going to run the company with all the sales, marketing and technical people I saw let go today.”


17 Responses to Creative Memories Parent Company Antioch Files Chapter 11 Bankruptcy Again

  1. deb April 17, 2013 at 8:53 pm #

    Nancy this is a wonderful written article by you. I’m sorry to hear this news. I know my own crafting budget has taken a big hit. I am learning to do more with less, as well as price check items closely before purchase in stores or on line for the best deal.
    Thanks for keeping us informed.
    deb

    • Nancy Nally April 17, 2013 at 9:19 pm #

      Thank you for the compliment Deb! I am so glad I can be of help in bringing the community the information it needs.

  2. Katie K. April 17, 2013 at 11:04 pm #

    Thanks Nancy for writing this informative article. I knew to look for it as even though I have emails and phone calls I received from CM over the past few days/weeks(I am a consultant), you are always right on top of the news! As typical in situations like this – there are lots of layers of information that gets put out or distributed. It can be like a big chocolate cake with lots of family members at the table – different size pieces on the plates and maybe some for health reasons should get smaller slices but all of the family members and kids the loudest wanting either equal pieces and/or asking for more, more, more.

    I have some views and theories on the situation as well as perspective from being a consultant for 15 plus years, a scrapbooker and photo historian since childhood, additional work that springboards from the others and my own personal journey evaluating the how/why of what I do to keep my life in balance and simplified in midst of crisis and budget challenges. I plan on avoiding the chit-chat gossip that will surely abound out here in the ‘net and not rush to assumption and guessing.

    Having been a consultant for as long as I have, there will be folks among those who lost their jobs that I have met, learned from, laughed with, chatted with and they will be missed. I never met and spent time with a better group of folks working hard to deliver the goods/services that carried the CM mission out of St.Cloud and into the hearts and laps of folks all over the world for the most basic and best reasons to put photos, stories, and memories together – To reinforce that life is worth living. it’s filled with magic and fun and people are important.

    Why there are still so many wonderful places and ways to shop and share to help us.

    Or to use my analogy one last time – plenty of cookbooks, bakers, and cake recipes out there – chocolate, spice, butter, 3 layers with mousse filling, gluten-free, nut-free, egg-less cake, or the simple cottage cake. Whatever one’s desires – Life’s too special not to have dessert!

    Again, Nancy, Stephanie and Tammy – thanks for your posts and updates you write for all of us in this industry.

  3. swogatske April 18, 2013 at 10:33 am #

    Katie, very nicely put!

  4. Lisa April 18, 2013 at 1:50 pm #

    Thank you so much for keeping us informed!! Praying that things work out for CM!

  5. Kelly K. April 18, 2013 at 10:26 pm #

    There will be lots of speculation over the next few weeks and months. We are not priviledged to all the information to make comments about the future of the company. Let’s give Creative Memories time to sort things out. They have great products and are a pioneer in an industry we all love and support. I believe in their products, their mission, and their management team. Creative Memories has blessed alot of people over the years and have even mended relationships through their mission. I too am praying for Creative Memories and it’s management team.

    • Katie K. April 21, 2013 at 4:51 pm #

      Thanks Kelly. Yes, CM has blessed many folks through its products, services, charitable donations, and business opportunities.
      So true re: speculation. Last time the company was in Ch. 11, the gossip , nonsense and half-truths that circulated was amazing and folks used up valuable time and energy reading and searching for more of the same.
      Yesterday I was at my discount LSS to pick up some supplies. Every time I go I am reminded why there needs to be multiple shopping options for us crafters. Sometimes we need a product right away and can’t wait for it to be shipped, other times it’s to take advantage of a deal, and many times its ‘cuz that item is an impulse purchase. However there are reasons that stores and companies that can provide a higher quality product and/or different customer service experience need to continue to exist. Obviously, where the money goes is what will determine which will continue to be in business.
      I get frustrated by the obvious void of positive mention of CM products and services on the crafting sites and blogs while other well-known DSS crafting industries are referenced frequently. There are many reasons for that I’m sure but I don’t know them all. Would and could that publicity and marketing help this company – don’t know.
      The past ~6 years have been difficult for many in the craft business – LSS, larger national chains, online sites, and individuals artists. We all know the reasons. Hopefully, the businesses that folks want to stick around for them will get their continued support.

  6. Carla April 19, 2013 at 9:03 pm #

    So basically Dawn, Sharon and other higher up’s in the company are out what they were owed?
    I also noticed Carol Heistand just retired March 1, 2013 right before the filing. She is/was related to someone in the company isn’t/wasn’t she? So sad all the way around….. I feel awful for ALL involved and CM. Although sometimes I did think they were overpriced and made it almost impossible to use their products and make money as a Consultant. I was with the company for about 5 or more years myself!

  7. Bec Kilgore April 20, 2013 at 8:42 pm #

    I go to a CMs consultants monthly weekend retreat. I have come to appreciate some of the good quality products that CM makes even if there are certain things I am not too crazy about using in my scrapbooks. I hope things go well for them. I know a bankruptcy this close to the other one is not a good sign but we can always hope.

  8. Gab April 21, 2013 at 1:13 am #

    Very interesting … I hope they make it.
    Well written article thanks Nancy

  9. Nancy April 25, 2013 at 2:38 pm #

    Pitiful-those who “made” this company are now being kicked to the curb.

  10. Doris April 29, 2013 at 7:48 pm #

    I have enjoyed Creative Memories products, consultants and the other wonderful faith-based women I meet through Creative Memories Crops. Praying management works out a workable management plan so it can stay in business. Also praying for those who lost their jobs to quickly find suitable replacements.

  11. Beth Sutton May 1, 2013 at 4:45 pm #

    I could be wrong, but I think the bankruptcy they went through last time was Chapter 13.

    • D.Pepperd May 7, 2013 at 2:35 am #

      You may delete my previous comment as I misread Beth Sutton’s comment. I was addressing this filing.

  12. tvintn May 13, 2013 at 2:09 pm #

    What happened to Dawn Oldham? Why would she retire – and now is owed over $1 million??! And Christy Keyton? I was a Senior UL for about 7 years before I left CM, and these were the pioneers that we all looked up to and emulated. Although I still scrap (digitally) and love CM I am so sad to see they are going thru bankruptcy a 2nd time in 5 years. So who is at the top of the company now?? And are people still making any $$ in CM? I left because, after 7 years, I was making no real money with them. I needed to make over 4,000 a month….and it just wasn’t feasible with CM. I’m thankful I found something else, but will forever be grateful to all I learned about direct sales with CM.

  13. Kory O June 19, 2013 at 7:57 pm #

    I am a former CM employee that was laid off in a previous round of lay-offs and an employee who l lost my retirement funds in the first bankruptcy. I am still a dedicated user of their products because I know from an insiders perspective it is highly superior to the competitors. I am saddened by what is happening at CM and believe the latest bankruptcy is due to poor leadership & decisions made at the top of the company including the CEO (who was brought in by the financing banks after the first bankruptcy) – and lack of accountability by the Board of Directors to do what was in the company’s best interest. Very sad.
    Regarding the post from above that references how expensive CM’s products are I would remind everyone that as a Direct Sales company more than 50% of the purchase price goes back to the independent consultants in the form of commissions, discounts, incentives, incentive trips, etc. With the remaining 50% the company needs to fund payroll & benefits, operational expenses, product development, goods manufacturing, etc. That doesn’t leave a lot of profit left. With most consultants in the business as hobbyists there simply was not enough volume sold to sustain it. I wish that CM had been up-front with consultants so they could better understand what they could have done to help the company. Let’s hope they are being honest now.
    I believe in the CM Mission. I want them to survive as I still love the products and most of the people that are still employed there. I guess all we can do is continue to support them with our sales dollars – and hope that they find new executive leadership who understands the mission and can lead them forward. Good Luck CM!

    • Kelly Kyle June 20, 2013 at 12:26 am #

      Thank you for you very welcomed comment. Everything else has been very negative. I am a Creative Memories leader and love the company I have grown to love and know now for 11 years! I wish you nothing but success in the future. Stay true! May God bless you and take care of you.

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