This past April, Paul Ginsburg was anxious and scared as he negotiated with Sterling National Bank. The 47-year-old president of Manhattan clothier Moe Ginsburg Men's Better Clothing needed to secure financing quickly. The third generation of his family to run a retail clothing operation in New York City, Ginsburg was coming off his worst year ever. His business was declining significantly.
was this year's first-quarter percentage increase in personal bankruptcies in the United States.
SOURCE: The Orlando Sentinal
Ginsburg had been hit with a triple whammy. The city's financial community had pared its wardrobe expenses last fall as dotcom shares crashed on Wall Street. To make matters worse, the sudden switch to business-casual dress policies at such stalwart suit-and-tie outfits as Morgan Stanley Dean Witter left him holding too much stock in tailored suits.
Ginsburg himself made the mistake that proved to be the coup de grace. He decided to remodel his store in 2000 and, because he had an aversion to banks, financed the renovation with money that might otherwise have tided him over.
Now banks represented his best chance to get the financing to keep him independent. Without Sterling's guidance and money, Ginsburg didn't stand a chance of filing a successful reorganization plan for his company and its debts under the bankruptcy laws. His creditors might use those same laws to dissolve his business.
The bank agreed to a loan in conjunction with Ginsburg's May 1 filing under the bankruptcy reorganization provision known as Chapter 11. He received so-called debtor-in-possession financing (money granted under special provisions to someone under bankruptcy court protection), won approval of his reorganization plan by his creditors and conducted the first layoffs of his life by reducing his staff from 45 to 25. He was on the road to rebuilding his business.