THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, October 18, 1994 TAG: 9410180297
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Medium: 51 lines
First, the Groom's Corner stores sales plunged, then the bills piled up, then their phones were disconnected, and Friday they called it quits in filing for Chapter 7 bankruptcy.
The owners of Virginia Formals Inc., the company that ran three Groom's Corner stores in Virginia Beach and one in Chesapeake, essentially decided there was no obvious solution to their lack of sales, the company's attorney said Monday.
``Sales have just been down, down, down over the past two or three years,'' said Dean W. Sword Jr., the company's bankruptcy attorney. ``The principals have been trying to figure out why, and they're not entirely sure.''
James L. Duesberry, president of the company, was listed in court papers as owning 60 percent of Virginia Formals. Charles Headly was listed as the primary stockholder, with a 20 percent interest.
The Groom's Corner's problems had apparently been evident for some time. Pembroke Mall General Manager Jim Hill said he locked up The Groom's Corner there in April. The company still owes Pembroke Mall ``a substantial amount of money'' on its lease.
But if the mall wants to recover its money, it will have to get in line. Virginia Formals listed eight pages of creditors in its bankruptcy filing. It owes the Internal Revenue Service $65,000, the city of Norfolk $12,000, Beach Ford $2,400, Commerce Bank in Virginia Beach $39,000, and the Norfolk Tides $350, among others.
All told, the company listed $136,900 in assets and $299,695 in liabilities.
Duesberry was perplexed about the drop in business, said attorney Sword. The company normally did the bulk of its business during prom season in the spring, and around the end-of-year holidays. ``Their business last year, particularly in the spring, was nowhere near where it was supposed to be,'' Sword said.
That left Duesberry with a decision: Try to reorganize under a Chapter 11 bankruptcy, or just pack it in? But there was little to reorganize. As of a month ago, Sword said, Groom's Corner had been locked out of two of its stores for failure to pay rent, and court action was pending on the other two stores.
``The thing is, people come in and everybody wants to salvage something,'' Sword said. ``Anybody is reluctant to admit that you've failed. Basically, that's what a Chapter 7 says - `We have failed.'
``This one just didn't look like it was going to fly.'' by CNB