Wolf Camera Bankruptcy

Wolf Camera  Bankruptcy Case is Winding Down
Lisa R. Schoolcraft

Two years after it filed Chapter 11, the bankruptcy case of Wolf Camera Inc. will wind to a close in the next two months.

In June, Jeff Kelley, a partner in the bankruptcy department of Atlanta law firm Powell, Goldstein, Frazer & Murphy LLP, Wolf's attorneys, took action to recover $20.1 million that Wolf Camera paid vendors and suppliers just prior to its bankruptcy filing.

Total restructuring and financing costs for Wolf Camera, as of March 31, stood at $8 million, according to court documents. Some of those costs include fees paid to accounting and law firms working on the restructuring.

As of June 18, Powell, Goldstein, Frazer & Murphy had received $1.72 million in compensation and $103,260 in expenses working on the bankruptcy case, documents show.

As of May 13, the accounting firm Deloitte & Touche LLP had received $401,491 in compensation working on the case.

Kritzer & Levick P.C., the former counsel for the Official Committee of Unsecured Creditors, received $303,313. Greenberg Traurig LLP, the current counsel for the unsecured creditors, had received $136,089 as of March 19.

Ernst & Young LLP, which was the financial adviser to the unsecured creditors, received $296,405 for its work.

Although accounting and legal costs continue in the case, it is no longer a matter for the bankruptcy court following the Jan. 7 liquidation plan approval, Kelley said.
" We should be able to get a final decree in the case in September or October," Kelley said. "That's not to say there won't be some preference recovery cases around. Those can linger for quite a while. But in a lot of ways you can say the case is closed now. Essentially, the company emerged from bankruptcy on Jan. 7."

But it is a changed company, he said. Ritz Camera Centers Inc., based in Beltsville, Md., bought Wolf Camera in October 2001 for $84.7 million. Ritz is one of the largest retail camera and photo chains in the United States with approximately 1,200 locations in 48 states and the District of Columbia.

"You can look at it as a merger through the auspices of a bankruptcy," Kelley said. "Wolf Camera did survive. The negative is it is not Atlanta-based any more."

Among the actions Kelley took in June to get back money Wolf paid to suppliers, he is seeking to recover $4.4 million, plus interest, from Nikon Inc.

Kelley is also seeking to recover $3 million Wolf paid to Sony Electronics Inc. Other large payouts before Wolf filed bankruptcy were Olympus America Inc., $2.6 million, and Minolta Corp., $1.8 million, according to documents filed with the U.S. Bankruptcy Court's Northern District of Georgia.

Some suppliers and vendors got paid just days before the June 21, 2001, bankruptcy filing with cashier's checks or wire transfers, including $126,139 paid to Pakor Inc. on June 20, 2001, and $194,761 paid to Pulnix America Inc. in two separate cashier's checks, also on June 20, 2001.

Wolf paid Atlanta-based United Parcel Service Inc. (NYSE: UPS) $91,524 through a wire transfer two days before it declared bankruptcy. Kelley is seeking a total of $329,424 from the package delivery company.

It is not uncommon for vendors and suppliers of a company in a cash crunch to demand payment to deliver goods and services, Kelley said.

"Vendors begin to demand preferential treatment," Kelley said. "It's not a bad thing that they got it, but the law recognizes that this occurs and invokes this 90-day period prior to the filing date to recover payments outside the ordinary course of business."

To determine what are payments outside the ordinary course of business, "you compare the payments made outside the 90-day period," he said. "A wire transfer is kind of a red flag. But these things happen when word gets out on the street that someone is running out of cash."

Essentially, though, the bankruptcy is over, Kelley said.

"Really, now all that's left is to collect the preference recoveries and redistribute it," he said.

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