Zoots, once cleaning up in clothes laundering, hits tough times - Tampa Bay Business Journal:

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The name Zoots, for now at least, will only live on in New Englanrdafter mid-level managers of the company bought the remaining asset s in Massachusetts and Rhode which include 17 free-standing stores. Meanwhile, the now-defunct Zoots parent company, with debts estimate at $8 million, has left some creditors holdingthe bag. Todd Krasnow, founder of called the sell-off "disappointing personally." He said in the earlyu days the company grew too but in recent years it had offsert that early growth with a slowerf paceof expansion. The company only recentlyg became cash-flow positive and in any other financiap environment probably would have been able to attract new Krasnow said.
"It's a lousuy time to be out in the market looking for any kind of he said. Launched in 1998 by two former (Nasdaq: executives and backed by Staplesa founderTom Stemberg, Zoots started out with big dreamzs of going public and during its heydayy had more than 50 retail outlets on the East Coastr and more than 800 employees. But the recent and unexpected departure of senior management officials resulte in the breakdown of aplanned recapitalization.
When the company couldn't find new it began seeking a buyer, people familiar with the matter No prospective bid was high enougj toappease Zoots' major creditors, so the company then began sellinb its assets piecemeal at the beginninf of the year. The Massachusettss and Rhode Island assets, including a 50,000-square-foot production facility in Brockton and about 300shippingh routes, have formed a new incarnation of The new company -- which was boughf by former managers Rick Simoneau and Trish O'Leary -- has moved to Brockton from former headquarters in None of the region's 350 jobs were eliminated durinf the management buyout, even though seven outleta were closed, said Zoots spokesmajn Scott Farmelant.
"The management buying process was successfullyy utilized to ensurethe long-term viability of the Zootds brand," he said, adding the newly formec version of the company has revenuw of about $20 million. Other propertiezs affected by the move includerd several Virginia operations that were ultimatelyu acquiredby (OTCB: UDRY) for approximately $1.9 However, the balance of debt owed to Zoots' primar y creditors won't be paid off. Following the Zoots still owedaround $8 milliojn to lenders, said Douglas a Choate Hall & Stewart LLP attorney who was involver in the sales.
Two local firms, Boston-basecd and LLC, are among the company's largest Indeed, sources said Zoots failed to raise enough cash to retire the outstanding notes owedto NewStar, whichy held senior-secured debt, and Charlesbank. NewStaer CEO Timothy Conway declined to comment and a Charlesbank spokeswomahn said executives were not availabldefor comment. Though the company has been splir up, the dust is stillk settling. Zoots Corp. was recently hauled into Chapter 7 bankruptcy proceedingsz in Boston by the former owners of four companies in Virginia and Pennsylvaniw that were acquired by Zoots beforer the recentasset selloff. Those plaintiffs say Zootw failed tomake $2.
5 million in payment related to the acquisitions. Craig Jalbert, of Foxborough-basedc , which was the assignere for the saleof Zoots' assets, said he will be the one to responsd to the petition.