Hakakians receive court OK to acquire Krause's
By Clint Engel -- Furniture Today, October 28, 2001
BREA, Calif. — BREA, Calif. — Alex Hakakian and two of his brothers have approval from U.S. bankruptcy court to buy Krause's factory equipment and lease about 40 stores under a revised plan to rescue the company.
The Hakakian Group, which includes Alex and brothers Kay and Nader Hakakian, hope to bring in additional suppliers to the Top 100 maker and retailer of custom upholstery, which filed for Chapter 11 bankruptcy protection this summer, liquidating 32 of its 89 stores.
Alex Hakakian estimated that a 40-store company would have annual sales of about $85 million. Last year, with about 100 stores, Krause's had sales of $155.3 million.
"We would assume many of the leases and continue the operations," he said, "creating some alliances with some outside factories maybe slightly different from the alliances Krause's had."
Earlier this month, it looked like time was up for Krause's. But now, Hakakian, who also operates six Leather Expo stores — recently converted to full-line units — in Southern California, said he is interviewing and rehiring most of Krause's factory employees and plans to take over the stores after the ongoing merchandise liquidation.
"We're evaluating which locations we are going to retain and which we will reject," he said.
The Hakakian Group hopes to have stores reopened before January. That includes most of the top-performing Krause's stores in California as well as some units in the Denver and Seattle markets and in Arizona. The best Castro Convertibles stores in greater New York also would stay open. Castro is an operating division of Krause's.
Castro stores in Connecticut and Krause's stores in Las Vegas likely would be closed, Hakakian said.
A new lease plan for Krause's factory has been worked out, clearing the way for the court to approve the ownership change, Hakakian said.
He said the new owners eventually may relocate the Brea factory to a smaller facility and open factory operations on the East Coast.
Hakakian said he believes the new owners, which are putting up $9 million and negotiating with lenders for more, will be successful in reviving Krause's.
"We're feeling extremely optimistic, even in light of the looming recession," he said. "We will have a very successful operation going forward."
If all goes to plan, Alex Hakakian would become chief executive officer of the new Krause's. Kay Hakakian, who owns a factory in Russia and designer showrooms in New York and Florida, is interim president, and heads an effort to develop alliances with other factories for new product in the Krause's stores.
Nader Hakakian, who owns a design center in New York, would be involved with the Castro stores in metro New York.
The new owners would hire most of Krause's upper and middle management, Alex Hakakian said. He said Herb Friedman, president of Krause's, and Bob Burton, chief financial officer, already are on the payroll working on a transition team.
Krause's Chairman and CEO Philip Hawley will be invited to join the new company's board, possibly as chairman.
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Krause's options fade
Oct 7, 2001 -
Krause's asks for debt cuts
Jun 16, 2002 -
Krause's names Ploy president
Nov 11, 2001
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