Mary Sue Candies Inc. and Naron Candy Co., the Baltimore-based candy makers that had struggled since merging five years ago, were sold at auction yesterday for $890,000.
Ruxton Chocolates LLC, formed by a 23-year-old recent college graduate from Ruxton and his family, purchased the companies, which make Mary Sue Easter eggs and Naron gourmet chocolate.
"We hope to come in and not really shake things up, just return it to profitability and sell these quality products," said Bill Buppert of Ruxton Chocolates. "Mary Sue and Naron both have very good brand names within the Baltimore metropolitan area."
Mary Sue, founded in Baltimore in 1948, and Naron, founded in Baltimore in 1905, have been run jointly by Chesapeake Candy Inc. since the two candy makers merged in 1996. On Aug. 31, Chesapeake filed for state court insolvency, which is similar to a Chapter 7 bankruptcy in federal court.
Ruxton Chocolates will pay $320,000 for the Chesapeake real estate, including an 18,000-square-foot plant on Caton Avenue and a distribution center in Hampden. It also will pay $570,000 for personal property, including equipment, trade names, customer lists, accounts receivable and inventory.
The new owner has no current plans to add or discontinue products and said the plant will continue making the well-known Mary Sue Easter eggs.
Mark Berman, the former president of the combined companies, had said the merger had been costlier than expected, leaving the companies burdened with debt of $1.2 million and unable to turn a profit. He had said the auction would allow Chesapeake to pay creditors and find new owners who could give the candy makers a fresh start.
Buppert, who recently graduated from the University of Richmond with a finance degree, said yesterday that he plans to improve inefficiencies that had hurt the business and hopes the capital infusion will help jump-start sales.
He is taking over a company that is now debt-free, which should make it easier to return to profitability, he said.
"The cost of carrying the debt was too expensive for the company," he said.
Since filing for insolvency, Chesapeake has continued making candy, under the oversight of Howard A. Rubenstein, a court-appointed assignee for creditors and a bankruptcy lawyer with Adelberg, Rudow, Dorf & Hendler. The company has about $3.5 million in sales and from 35 to 110 employees.
Yesterday's auction at the company's West Baltimore plant drew five registered bidders, each of whom posted $50,000 deposits. The bidding started at $500,000.
"I've never seen an auction like that," said Allan D. Gallant, head of Greenspring Gourmet, a group of local business people who wanted to purchase the candy company.
"I was looking forward to running it," Gallant said. "We didn't even get a bid in, it shot right up so fast."
Daniel M. Billig, a partner with A.J. Billig & Co. Auctioneers, which ran the sale, took 35 bids.
"We thought the price was right in line with where it should be," Billig said.
The sale to Ruxton Chocolates is subject to court approval. Baltimore Circuit Court is expected to ratify the sale of personal property today and to ratify the real estate sale within 30 days.
The personal property sale should settle in five days; while the real estate settlement will occur at least five days after the court grants approval, Billig said.