Eli Kadoch's ball, prom and special events dress shop went through a painful restructuring this fall just as the wedding show season hit. But most customers never noticed.
Grace Cardone was worried. Earlier this year she put down a $1,000 deposit on her wedding dress, which was to be delivered in early 2005. But people were telling her that S.B. Soirée,-- the shop where she had ordered her gown ,--was experiencing financial difficulties, and she wasn't sure if the dress would be ready on time, if at all.
"I found it hard to believe," said Cardone, who will be getting married this summer to her longtime partner Alessandro Zazzara. "They are such nice people and they have such a big store. How could this possibly happen?"
Cardone needn't have been concerned. Like the 150 other S.B. Soirée clients who placed $70,000 worth of deposits on wedding, graduation and evening gowns, she will get her dress on schedule. The company did go through a spell of trouble, but for most customers it was "business as usual," said Eli Kadoch, the company's president and majority shareholder.
Kadoch's problems began in the fall of 2001, when he lived through what for most businessmen is a nightmare scenario. Federal and provincial tax auditors reversed several "close to the line," deductions and assumptions his bookkeepers had made. The upshot was a $220,000 tax bill that left Kadoch reeling.
"We've been at this store for eight years, but that was a lot of money to come up with," Kadoch said. "I tried to make the payments to my suppliers, but eventually I fell behind."
Kadoch is a clothing industry veteran who has weathered many storms. He studied history at Concordia, but left before finishing his degree to tour the Caribbean where he spent 18 months before joining his father in business. In 1991 he struck out on his own for the first time. In 1997 he founded S.B. Soirée in 3,000 square feet of rented space on Chabanel St. He soon developed a reputation for offering quality products at competitive prices and his shop grew quickly to 9,000 and then 20,000 square feet.
From his long experience in business Kadoch knew that the store had good potential as a going concern, so rather than liquidate the company he filed for protection under the Bankruptcy and Insolvency Act. Several weeks ago his creditors voted to accept his offer of 22.5 cents on the dollar, which will be paid out over the next year or so.
The difficulties couldn't have come at a worse time for Kadosh. The wedding gown season runs from September to April, and each sale counts. His troubles were made worse by the fact that some competitors, --whom Kadoch declined to name,-- were taking advantage of the situation by warning clients against dealing with a store that was facing bankruptcy.
Instead of getting mad, Kadoch got funny. He reacted by holding a "Not Bankruptcy," sale, which he advertised extensively in local newspapers. The sale served to quell the fears of those who worried about dealing with S.B. Soirée and also gently reminded competitors that Kadoch had no intention of quitting.
According to Solange de Billy-Tremblay, a trustee with de Billy-Tremblay et Associés, which handles about 200 business and personal files a each year, people need to be aware of the difference between a bankruptcy and a proposal to creditors under the Bankruptcy and Insolvency Act.
"When a corporation files for bankruptcy it dies," de Billy Tremblay said. "Even if the assets are acquired by someone else and the business continues, it becomes a new legal entity."
When a company files a proposal to creditors under the Bankruptcy and Insolvency Act, if it is accepted, the entity running the business is the same. According to one key supplier, who backed S.B. Soirée throughout the restructuring, Kadoch made some smart moves.
"Wedding gown retailing is fiercely competitive right now," said Steve Sartori, organizer of Le Grand Salon Marions-Nous, one of the industry's biggest wedding shows, which will be held at Place Bonaventure on January 8th and 9th. "Several new players have jumped into the market recently, and none have left. So it's tough out there."
Sartori didn't think twice about standing behind S.B. Soirée.
"He's been a client for five years and he's always met his commitments," Sartori said. "But it's easier for us, because he didn't owe us any money."
Sartori's support was crucial. Le Grand Salon Marion-Nous, is one of Montreal's wedding industry's most important events. The two booths that S.B. Soirée rents give Kadoch's products unparalleled exposure.
Neil Uditsky, vice-president of Oblique/ Bradox Fashions, --another S.B. Soirée supplier,-- also agreed to support Kadoch.
"He's bought big from us over the years, but we also lost big," Uditsky said. "Our hope is that we can make back some of our losses over the next few years. If he'd gone bankrupt we'd probably have lost everything."
As for Cardone, she had more important things to worry about than the details of S.B. Soirée's restructuring, which she only found out about after the fact.
"I never really believed the rumors," Carbone said. "Today was the first time that I learnt for sure they had gone into bankruptcy protection. And to be honest it didn't affect me at all."
EDS: Freelance material. Reprint fee for use is $40. Please
make payment directly
|© 2004 Peter Diekmeyer Communications Inc.|