Artist & Craftsman, one of the largest independent art supply chains in the United States, filed for Chapter 11 bankruptcy days before Christmas, saying lenders exercised control over the company’s cash.
“This case was not filed lightly,” Chief Financial Officer Glenn L. Davis wrote in a declaration filed in support of the company’s first-day motions. “Recent economic headwinds and unyielding lending restrictions have put a severe strain on the Debtor’s finances, necessitating this filing.”
The Chapter 11 case, filed on December 21 in the U.S. Bankruptcy Court in Maine, puts the 40-year-old retailer under federal protection as it seeks permission to access cash and pay employees.
Artist & Craftsman is still bringing in hundreds of thousands of dollars a week, court records show, but the company says lending rules sent that money to creditors before it could use it.
The company was founded in 1985 as a small fine art supply store in Portland, Maine, and expanded through the 1990s into a retail chain selling professional art materials across 11 states. It also operates a substantial online business.
Davis said sales from the company’s 18 stores were deposited into local accounts, then gathered at Cambridge Savings Bank. From there, revenues were “swept daily” into a lockbox account and used to pay down the company’s credit line with Cambridge before it could use the cash for expenses. That affected how much the retailer said it could borrow to fund payroll, inventory, rent and utilities.
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