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BigPlayJ

Israels and Klingman's to Close

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Ouch, that's not good at all. =[ I wasn't really expecting it, but I'm not surprised either.

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The whole story is kind of interesting in the context of Art Van's expansion, let alone his buying a penthouse in GR.

My questions on this: Is Bob Israels completely shut down now? He doesn't have any more stores, right? But does he have other businesses? And what does this mean for the spaces on Seward Ave.?

UPDATE: Some answers to those questions are here in this follow-up piece.

The John Widdicomb Trade Center, a design showroom Israels started in an old West Side furniture factory, is not expected to be part of the sale but its inventory will be liquidated through Israels and Klingman's.

If the sales generate enough money to pay off the banks, Israels said he will reopen as a smaller business with help from outside, non-bank investors.

Anyone know any more details?

Edited by RegalTDP

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'The stores employ an estimated 150 people.'

That's a lot of Green Well sized restaurants to offset this loss.

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You've got to wonder what the banks are thinking. This has to be some sort of balance sheet or regulatory issue for them, because it doesn't seem to make a whole lot of sense from any other perspective. Per the articles, their security for the loans appears to be against the trade fixtures and inventory, which normally have a much lower value in a liquidation than as part of an ongoing concern. Further, the inventory would ultimately be sold anyway. Since the building was on a land contract, and per Israels, his own real property holding are separate, the banks apparently have no real property security. That leaves then with Israel's personal guaranty, which may not be worth a hill of beans if he files for bankruptcy protection. The whole situation is odd. Although, if Macatawa is still under close FDIC scrutiny, that could be playing a role. Fifth Third would then have little alternative but to pile on the bandwagon, depending on how the whole deal was structured.

Whatever the case, it's a sad situation. I also question just how bad a bad PR move for both Fifth Third and Macatawa Bank this is. Granted, they're doing what banks do, but when you shut down Bob Israels, it's a little different than shutting down some two-bit corner store. One wonders if this might so anger some wealthy local people that they will yank their cash out of Fifth Third and Macatawa Bank. Theoretically, that could do far more damage than a delayed repayment schedule by Israels (who seems to be intent on making the banks whole anyway). Too bad I don't have a fat stack of cash sitting over at one of these banks. It would be gone tomorrow with a nicely worded letter to the nitwit that "fired" Israels from his own store.

(Although, I've also got to wonder why Israels doesn't file a Chapter 11 if a little more time would actually fix it all).

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