Baltimore candy maker will be sold at auction

City court approves move to pay off debt, keep company going

Mary Sue, Naron products

September 27, 2001|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The Baltimore maker of Mary Sue Easter eggs and of gourmet chocolate, Chesapeake Candy Inc., will be sold at auction next month as a way to pay off debt and keep the struggling company going.

The public auction of Chesapeake Candy, which runs Mary Sue Candies Inc. and Naron Candy Co., was approved Tuesday by Baltimore Circuit Court. The candy maker filed Aug. 31 for state court insolvency, which is similar to a Chapter 7 bankruptcy in federal court.

The company has struggled since a 1996 merger between Mary Sue and Naron left it burdened with debt - now at $1.2 million - and unable to turn a profit, Mark Berman, president of the combined companies, said yesterday.

"We had expected certain economies of scale to materialize, and they didn't," Berman said. "The costs of merging were greater than expected, and the companies didn't have the capital structure that enabled it to make a profit. We were trapped with debt from the past."

The auction, scheduled for 11 a.m. Oct. 15 at the company's West Baltimore plant, will enable Chesapeake to pay creditors and allow new owners to give the candy maker a fresh start, Berman said.

"It allows the company to sell with the blessing of the court, and many buyers need that kind of assurance in order to get good title," said Howard A. Rubenstein, a bankruptcy lawyer with Adelberg, Rudow, Dorf & Hendler, who is the court-appointed assignee for the creditors and, for now, is overseeing the company's operations. "The purchaser will get clear title."

The company is continuing to make candy at its Caton Avenue plant and distribute it through a center in Hampden, though it has stopped distributing non-Mary Sue or Naron products, which had acted as a drain on the business, Berman said.

The company, with about $3.5 million in sales and from 35 to 110 employees depending on the season, will be sold to the highest bidder in its entirety.

That includes the 18,000-square-foot plant, the distribution center, equipment, trade names, customer lists, accounts receivable and inventory.

"I'm interested in making sure Mary Sue Easter eggs and Naron candy are available to the public for a long time to come," said Berman, whose grandfather, Samuel "Sacha" Spector, founded Mary Sue in Baltimore in 1948. "It's important that the tradition be continued."

Many Baltimoreans have made an annual tradition of buying Mary Sue Easter eggs, advertised each spring with a familiar jingle sung to the tune of "My Little Buttercup" from the Gilbert and Sullivan comic opera H.M.S. Pinafore.

Mary Sue products are sold in supermarkets, drugstores and mass merchants, mostly in the mid-Atlantic region. Naron, founded in Baltimore in 1905, makes gourmet chocolates, sold mostly in candy stores and card shops, also in the mid-Atlantic.

The auction has drawn interest from several parties, Rubenstein said.

"With such a well-known local name, I would not be surprised if several local groups took an interest," said Daniel M. Billig, a partner in A.J. Billig & Co. Auctioneers, which is handling the sale.

One bidder will be Greenspring Gourmet, a group of local business people headed by Allan D. Gallant that was formed expressly to try to purchase Chesapeake.

Gallant, 67, who has known the Mary Sue founding family for many years, said his group of an antiques dealer, attorneys and bankers, has raised $600,000 to go toward a bid.

"All of us in Greenspring Gourmet know the family and believe this is a worthy business that should be saved, for the maintenance of quality products and a Baltimore landmark," Gallant said. "We're local business people who don't want to see Baltimore lose Mary Sue."

If his group wins its bid, it would run the company, but leave Berman in charge of candy making and Murph Scherr, the former president of Naron, in charge of sales, Gallant said. The company has suffered from failing to look after basics such as collecting accounts receivable and keeping inventory in balance, Gallant said. But its strengths are its products, he said.

"This company has got two brand names that stand for quality, a recognized name in the marketplace," he said.

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