3 creditors trying to force Epsteins bankruptcy Sale of retailer's assets won't pay bills, they say

February 07, 1991|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

Although L. Epstein and Sons Inc. plans to go out of business and has begun to liquidate its assets, three of the retailer's creditors are trying to force the company into bankruptcy.

Gutman Realty Co., Dry Holdings Ltd. and Noe-Equl Hosiery Corp. filed an involuntary-bankruptcy petition under Chapter 7 of the U.S. Bankruptcy Code on Tuesday in U.S District Court in Baltimore.

Under federal law, a bankruptcy judge could decide that Epsteins should be declared bankrupt against its will. If so, its liquidation process would be controlled by the court.

In their petition, the creditors said Epsteins "through communications with its creditors. . . has virtually admitted that the liquidation will not generate sufficient funds to pay general creditors in full."

Epsteins officials could not be reached for comment.

The creditors and their lawyers refused to respond to questions about the filing.

Michael Fine, a Baltimore lawyer who specializes in bankruptcy law but who is not connected with the Epsteins case, said that when a company has begun to liquidate its assets, it is in the best interest of unsecured creditors to force the company into bankruptcy. Under court supervision, the assets could be disbursed equitably.

"This allows the creditors to freeze the liquidation before the business is dissolved and all the assets are gone. Otherwise, they pay who they want and some creditors could end up without a dime," Fine said.

Fine also said the filing puts an automatic "stay," or hold, on Epsteins' liquidation process.

Epsteins has been advertising that everything in its stores is now 60 percent off. "After 65 years, a Baltimore institution is going out of business," the ads read.

Three weeks ago, Epsteins, Maryland's oldest locally based and family-owned general department store, announced plans to close its seven locations citing adverse economic conditions in general and a poor retail environment in particular.

Since that announcement, Epsteins has closed four stores. The stores that remain open are located 6812 Reisterstown Road, at 6510 Baltimore National Pike and at Park Avenue and Lexington Street.

Gutman Realty, which operates the Brager-Gutman building on Lexington Street, claims Epsteins is $136,114 behind in its rent for December 1990 and January, and five months delinquent in payment to Gutman for real estate taxes. The old Gutman location was Epsteins "flagship" store and its largest with five levels and 95,000 square feet.

Noe-Equl Hosiery claims Epsteins owes $9,840 for goods it sold the company. Dry Holdings, which sells lighting products, listed a $7,630 debt it was owed.

Epsteins was founded in 1926 by Russian immigrant brothers, Sidney and Samuel Epstein. In 1988, when Epsteins opened its 11th store, in Dundalk, it had stores in three counties and more than 500,000 square feet of retail space.

In the last two years, the company has closed its stores on Light Street, Gay Street and in the Westminster Shopping Center.

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