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Marshall Reddick Filing for Chapter 11 Reorganization |
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I want to let you know that Marshall Reddick Realty and Marshall Reddick Seminars are restructuring under Chapter 11 of the Bankruptcy Code. The case names are Marshall Reddick Realty, Inc., Case No. 8:09-bk-11254, U.S. Bankruptcy Court, Central District of California, filed 2-17-09, and Marshall Reddick Seminars, Inc., Case No. 8:09-bk-11255, U.S. Bankruptcy Court, Central District of California, filed 2-17-09.
I want to stress that our reorganization plan is to continue to operate our business uninterrupted in order to serve you.
So how did we get here? As you know, in the early 2000s, we experienced growth. We went from eight employees to 120 employees. During our best year in 2005, we were giving seminars and holding club meetings that resulted in about 1,000 sales per month aggregate made by the brokers who were doing business with us.
Since then, the bubble burst quite unexpectedly and quickly in our most active markets: Florida, Phoenix, Oregon, Las Vegas, and Hawaii. Then there was this year’s Wall Street meltdown. This was the final blow because it affected mortgage loans. Today our Network members who want to buy are finding it difficult to get loans. We think with government efforts this financial situation will improve in 2009.
So we join other venerable companies that have had to seek bankruptcy protection in these times: KB toys, Inc.; Circuit City Stores, Inc.; A Sharper Image, LLC; Linens ‘n Things, Inc.; Mervyn’s, LLC; Whitehall Jewelers; BTWW Retail L.P. (the country’s largest retailer of Western wear); Best Buy, Inc.; and most recently, Black Angus Restaurant.
Everyone agrees, including Donald Trump, that this is the best time in 30 years to purchase real estate, and that many millionaires will be made this year. I believe we have many new and very exciting programs that will enable us to continue our quest to wipe out middle-class poverty.
The business climate today is daunting and requires exceptional business skill: the International Council of Shopping Centers reports there have been 4,632 store closings: 17.6% home entertainment; 26.4% apparel; 18.1% jewelry; 14.5% food and beverage; 23.4% all others. According to the Bureau of Labor Statistics, 148,000 storefronts will be closed this year.
We have had four major layoffs and are now down to 20 W-2 employees. We are surviving with this fabulous group whom we affectionately call our “support team.” Everyone has had to work doubly hard. Management has gone from ten to four; we have gone from 20 mentors to two; and remaining management has taken a drastic pay cut, as have our Area Managers who are on commission.
We also had to walk away from our beautiful office building and move across the street into the upstairs offices of our Learning Center.
The principal problem we face is the many developers who did not perform. Most have now gone out of business or are barely hanging on. In the face of their non-performance, I did my utmost to help struggling Network members, first by selling my own properties so I could buy their properties. When I ran out of money, I joined Network members in their properties as an equity share partner. I am proud of these efforts since I believe I am the only one in the industry to do this. However, this created a huge negative cash flow for me of over $400,000 per month.
To pay for this and keep the company running, at first I pulled cash out of my personal properties that had equity, and later began selling off my properties—many of them at a huge discount and loss.
I have had to let all these bad properties go into foreclosure and regretfully have had to stop my participation on the equity shares.
Without these financial burdens, we will be fine.
The Good News We are using this process to reinvent ourselves, providing incredible real estate opportunities that our Network members have asked for. We are focusing on foreclosures, distressed new homes, tax deed lots, commercial properties, and our $23,900 REO home project in the Midwest. This means we are dramatically adjusting to today’s real estate market as it currently is to meet your needs.
Also, we are now conducting seminars about real estate by famous speakers, bringing them to you at great discounts. These will help sustain us until viable loans reappear. Over the past 30 years, we have always been good at reinventing ourselves and that will continue so we can bring you compelling programs.
By restructuring, we will dramatically reduce the pressure on the company’s operations and enable us to pursue our goal of helping you create wealth. As a leaner operation, we’ll be able to have a sustainable business to get us through this very difficult time in the finance and real estate industry, where many companies have disappeared.
Most of our 70,000 Network members have done well over the past 30 years and remain loyal to us and interested in investing in real estate through our Network.
More good news is that interest rates are declining, prices have declined dramatically, sales are up nationwide, more Network members are coming to our club meetings, and all of our events are drawing good crowds.
I am proud of what we stand for and the moral principles we have brought to this industry. We wish you great opportunity and success in 2009, and we hope we can continue to serve you well into the future.
Please note that to reduce costs we no longer mail our newsletter, which was our main way of communicating with you. Now that we only e-mail the newsletter, information about our free clubs, and other educational events, we need to update the email addresses of about 45,000 of our members. If you are not receiving our e-mails, please go to our website and register your e-mail address and current information. If you do not use e-mail, call us at (949) 885-8180 to have the newsletter faxed to you.
Thank you for your loyalty and support.
God bless you!
Marshall Reddick
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