KMR Inc. picks up the pieces after Leedmark's U.S. Waterloo

January 07, 1994|By Ross Hetrick | Ross Hetrick,Staff Writer

Robert Riesner strolls along grocery carts piled high with twisted dolls, half-opened medicine boxes and assorted other mutilated merchandise. On the other side of the aisle is exercise equipment that is definitely out of shape.

"Unfortunately, the liquidation customer is savage," he said, looking over some of the casualties of the Leedmark store in Glen Burnie. "Coming into a liquidation, they feel it is no longer their obligation to respect merchandise."

Mr. Riesner, the chairman of KMR Management Inc. of Glenside, Pa., is part of the team that oversaw the dismemberment of the one-of-a-kind Leedmark store -- a French idea that didn't survive in the eclectic American marketplace.

Dubbing itself "The New American Marketplace," the store has been phased out as part of a Chapter 11 bankruptcy proceeding that started in early November.

After two months of the liquidation sale, the 250,000-square-foot behemoth of a store stands empty with row after row of naked display shelves and yawning food freezers.

The merchandise in the store was cleared out by customers, as price cuts progressively rose to 95 percent by Dec. 30, the last day of the sale. Then, in the final hours of the sale, the store started offering shopping cart loads of products for $25 a cart and then $15 a cart.

"Our customers became our cleanup crew," Mr. Riesner said, recalling the buying frenzy on the last day. After that, all that had to be done was to sweep away the debris.

The sale, which started in the last week of October, brought in about $5 million, with $2.8 million left after expenses -- including the liquidator's fee of 7.5 percent of net sales -- were paid, according to information supplied in the bankruptcy case. That money went to Signet Bank/Maryland, the company's only secured creditor, which was owed $11.5 million at the beginning of November.

Now all that remains is the store's fixtures and other equipment, which are scheduled for auction Jan. 20.

There is also an agreement to sell the building to Wal-Mart Stores Inc., which is expected to become final at the end of this month.

While liquidating is perhaps the most visible part of KMR's business, most of the company's activities are in helping businesses turn around and avoid liquidation sales.

"One of my favorite bankers calls me Dr. Riesner," Mr. Riesner said. If called in time, he said, the firm's success rate is 90 percent. Former patients include the Scan furniture store and Baltimore plumbing supply company Schumacher & Seiler Inc. -- both of which successfully emerged from Chapter 11 bankruptcy.

"There's a lot of satisfaction to seeing a company come back and return to health," he said.

But that was not the case with Leedmark, which came to KMR in the fall.

It wasn't supposed to end this way. When the $10 million store opened in May 1991, traffic police had to be posted near routes 10 and 710 to control the number of curious customers streaming into the complex.

Conceived by the E. Leclerc Group, a French "hypermarket" retailer, the store was supposed to be a one-stop shopping paradise.

E. Leclerc had visions of setting up 20 Leedmarks throughout the mid-Atlantic if this one proved successful.

But while shoppers in the Glen Burnie area loyally patronized the store's grocery section, the other departments did not have the same attraction, said Richard Schroeder, chairman of G. B. Glenmark Ltd. Co., which traded as Leedmark.

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