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Buyer Seeks to Pull Blindsgalore Out of Bankruptcy

Buyer Seeks to Pull Blindsgalore Out of Bankruptcy

Internet: Competitors Contend Online Firm Won’t Sell Products

BY MIKE ALLEN

Consultants now managing QVDS Inc., the San Diego-based e-commerce company that went into Chapter 11 bankruptcy protection last month, have lined up a buyer for the failed company that sells blinds and window coverings over the Internet.

John Kirsten, principal for the Diablo Management Group, said his firm resumed operating Blindsgalore.com and Ezblinds.com, the two Web sites owned by QVDS Inc. on June 16 to preserve the Web sites’ brand name. The group also arranged the sale of the company to a local group of investors, Home Sublime LLC of Del Mar, for an undisclosed price.

Kirsten said his group is still entertaining competing bids for the company, and the sale isn’t final until it receives approval of the U.S. Bankruptcy Court. The Diablo Management Group has a long track record of managing troubled technology companies.

QVDS Inc., founded in 1998, did about $23 million in revenues in 2003, compared to about $17 million in revenues for the prior year. At its peak, QVDS had about 45 employees at its Sorrento Mesa office.

The dot-com was ranked No. 1 on the San Diego Business Journal’s fastest-growing private companies List in 2001, and made The List in subsequent years.

Numerous calls to the firm’s founder, Maurice Nieman, were not returned. Kirsten said all officers and directors of QVDS have resigned.

QVDS got into financial trouble when the costs of its Internet advertising and the promotion of its Web site exceeded the sales it was making for the window blinds, Kirsten said.

“The competition got extremely difficult and the costs for advertising, promoting, and driving clicks to the Web site knocked the margins out of the business, and the company got upside-down with its suppliers,” he said.

In its June 2 filing with the U.S. Bankruptcy Court, QVDS listed total assets of $399,011, and total liabilities of $7,585,006.

The five largest unsecured creditors listed in court documents were Bali/Spring Window

Fashions, Charlotte, N.C., $2.3 million; Elmar, Willow Grove, Pa., $715,223; Paymentech, Salem, N.H., $538,000; Google, Inc., San Francisco, $524,428; and Levolor, Freeport, Ill., $397,153.

Still Operating

Kirsten said he’s signed vendor agreements with most of the company’s suppliers to keep Blindsgalore operating during the bankruptcy process. The site contracts with a variety of home furnishing companies for the custom-made blinds sold through its Web sites.

Hunter Douglas, a large vendor that did not sign an agreement, said it is owed about $425,000 through four separate divisions.

“We had no idea they were going under,” said Al Hubner, director of credit for Hunter Douglas, based in Upper Saddle River, N.J.

Hunter Douglas had been providing blinds and other window products to QVDS for more than four years.

News that QVDS was in trouble emerged in April from a slew of customer complaints lodged against the company at the San Diego Better Business Bureau.

Over the course of several weeks, the BBB fielded more than 200 complaints against the company. On April 29, the BBB revoked the firm’s membership because it failed to deal with the complaints and did not return funds charged for the ordered merchandise.

Committed To Customers

Blindsgalore’s new management said it is committed to winning back its customers. But competitors have been quick to capitalize on the bad news and the temporary shutdown of the Web site.

“Blindsgalore is not accepting any new orders. In fact, we have heard from their creditors that they probably never will again,” said Jay Steinfeld, CEO at Blinds.com in an open letter posted on his company’s Web site.

Kirsten said he’s aware of that and other sites that are posting incorrect information about Blindsgalore.com, and has sent letters demanding they cease and desist such activity.

An open meeting of the creditors committee of QVDS and Blindsgalore.com is scheduled for July 6 at 11:15 a.m. at the Office of the U.S. Trustee in Downtown San Diego.

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