DULUTH, Minn. - 50 Below, a provider of dealer websites that employs about 250 people, filed for Chapter 11 bankruptcy Aug. 29, citing liabilities of more than $12 million (mostly tax-related), and estimated assets of no more than $50,000.
Financial consultant Rick Gallagher stated in a 50 Below news release that his client may exit Chapter 11 bankruptcy in three or four months.
“We expect to confirm a [payment] plan and exit bankruptcy very quickly,” he said. “It may be as soon as 90 or 120 days. The only piece remaining is structuring the payment plan for the tax. The business turnaround portion of the work is done. There is no expected reduction of jobs. If their current growth trajectory continues, there could be some additional jobs created.”
50 Below reported in the same release that it saw record revenue and profits for the first half of 2012. Revenue through June was $10.3 million, up 31 percent from the same period last year. Profits through June were $850,000, compared to a loss of more than $1.2 million in the first half of 2011.
“The company expects 2012 sales to surpass $20 million with projected profits to exceed $2 million,” Gallagher said.
The Chapter 11 petition, signed by 50 Below CEO David Hogge, estimated the number of creditors to be between 20 and 49. The company owes the Internal Revenue Service, its top creditor, $8.9 million in payroll taxes. The company also owes Minnesota about $1.5 million in taxes and unemployment insurance.
Other top 20 creditors include ADP Lightspeed ($205,000), World of Powersports ($150,000), electronic catalog provider HLSM ($110,000), and Advanstar Communications ($27,000; Advanstar is the parent company of Dealernews and Dealer Expo).
50 Below filed the bankruptcy petition at the U.S. Bankruptcy Court office in its home town of Duluth. The case was assigned case number 12-50900 to Judge Gregory Kishel.
A 341(a) meeting of creditors will take place Oct. 5 at the Duluth courthouse. Proofs of claims are due Jan. 3.
Chapter 11 permits reorganization under the U.S. bankruptcy laws. In most instances, the debtor remains in control of its operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.
Posted by Arlo Redwine