MISSOULA — Vann’s Inc., a Missoula-based appliance and electronics retail company, is seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
The decision comes after the troubled economy, high operating costs and deteriorating revenues from online sales contributed to the company’s recent financial struggles.
“The last 18 months have been a challenging time for the company,” said Jerry McConnell, Vann’s CEO. “The good news is Vann’s local lender, First Interstate Bank, has agreed to provide the financing we’ll need while in Chapter 11. We have every intention of emerging from this process as a healthy and growing business. We’re thankful to have the support of such an important partner.”
In June, GE Capital Solutions, a division of General Electric, informed Vann’s that it would terminate its financing of inventory purchases unless Vann’s met certain conditions. Vann’s offered to set a weekly budget and engage in a restructuring process. GE rejected the proposal and pulled its financing on July 20. Vann’s, left with no other option, sought protection under Chapter 11.
“We regret having to take this step,” McConnell said. “We want all our employees, customers and vendors to know it’s business as usual, and perhaps even better than usual because we will be focusing all our resources on improving the business as a whole. This should not affect our store or website operations. We’re working with our vendors to ensure retail goods and payments flow without a hiccup. Vann’s has a profitable retail business, the best selection of brands in the industry, and dedicated, accomplished employees.”
McConnell has had experience in turning companies around. He served as president and CEO of Jore during its Chapter 11 process 10 years ago, and as president of Spectrum Products, where he revitalized the company during its severe financial collapse. McConnell became CEO of Vann’s in June of this year.
Vann’s was founded in Missoula in 1961 as an appliance store. The company added electronics as the industry emerged and grew to serve five other locations in Western Montana. Vann’s was also an early leader in online retail, creating Vanns.com in 1998. In 2011, the company had $100 million in revenue. Vann’s employs 162 people and has stores in Billings, Bozeman, Flathead Valley, Hamilton and Missoula.