Volume 48, Issue 6 - November/Decemeber 2009
A dealers perspective
by R. Mark Reasbeck, owner of Coyote Springs Window and Door in Las Vegas. Mr. Reasbecks opinions are solely his own and do not necessarily reflect those of this magazine.
Several years ago, I attended a class for screenplay writing. I learned
that one of the most perfect movies for following the screenplay model was Fried
Green Tomatoes. Well, today I may have a story that may turn the tomatoes green
Where is the Allegiance?
The national headlines on December 5, 2008, included the takeover and staged sit-in by employees from Republic Windows of Chicago. The sit-in was initiated by a short two-day notice of the plant closure, which was a violation of the WARN Act.
On the landscape, it appeared the economy had just taken down another company, in the subterranean abyss; owner Richard Gillman was unwittingly following a pretty good screenplay. In fact, he attributed the closure to declining home sales, the credit debacle, and the lack of cooperation with Bank of America in one of the statements he made.
On December 10, BofA agreed to provide a loan of $1.75 million with partner JP Morgan/Chase (which had loaned $12 million to Republic in early 2007, giving it a minority interest in the company) to provide the payroll and benefits for the workers.
The bank provided this kind of money without collateral, with $10 million in bad debt and only one day away from the Chapter 7 filing by Richard Gillman on December 12, 2008.
The victims just kept on piling up. How many workers did this place have? According to the settlement, that would be a $200,000 per week payroll. Im in no way siding with the banks, but why did they all of a sudden provide the payroll funds?
Rest of the Story
So Republic president Richard Gillman, being $10 to $50 million in debt, makes a smart business decision and decides to (allegedly) siphon money from Republic to open Echo Windows in Red Oak, Iowa.
But there is more under the surface.
An elaborate and convoluted trail was unearthed by the Illinois Attorney General. Research by that office revealed that, in March 2008, Gillman was pursuing the purchase of the Red Oak plant from TRACO under the bogus LLC of Smithfield Windows, in order to allegedly cover up the connection to Republic. Smithfield then issued letters of intent to purchase all assets and intellectual property from Republic for $100,000. There were several other corporations allegedly set up for the sole purpose of laundering money from Republic to the new Iowa company. Machine tools, dies and presses also were purchased with the siphoned funds. Echo Windows received three truckloads of used equipment; Republic was missing more than three truckloads of equipment.
Echo Windows ultimately closed February 23, 2008; Gillman said the company was a victim of the harsh publicity of the Republic debacle.
And Justice for All
I have followed this story and collected data since it started. Richard Gillman was indicted on November 4, 2009, for mail fraud, felony theft, organizing a financial crime enterprise, high-jacking equipment and more. At press time, he was scheduled to be arraigned on November 24, 2009. We will all have to watch and see if the plot thickens or gets resolved.
This will probably be my last regularly-scheduled column. You see, I closed my window business this year, but am still kept busy still trying to collect money that is owed to me by builders. Since I am out of the loop in the industry, having a column by a former window distributor probably is not good policy for Shelter magazine. I have enjoyed taking what is my head and putting it to paper, and have made some new friends as a result of this column. I hope to be back from time to time when the mood (or the topic) strikes.
Thats a wrap.
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