Creative Memories/Antioch files for Chapter 11

By Britt Johnsen • bljohnsen@stcloudtimes.com • November 14, 2008
The owner of St. Cloud-based scrapbook maker Creative Memories has filed for Chapter 11 bankruptcy protection and has reached an agreement with its lenders to restructure its debt.
The Antioch Co. and six of its subsidiaries on Thursday filed voluntary petitions for Chapter 11 protection with the U.S. Bankruptcy Court for the Southern District of Ohio. Chapter 11 allows a company to stay in business while it reorganizes its finances.

Creative Memories will not lay off employees, make changes in management or close any of its facilities as a result of the filing, President and Chief Executive Officer Asha Morgan Moran said.
Creative Memories has more than 500 employees in St. Cloud, headquarters for the global direct-sales scrapbooking business that was a pioneer in its industry.

Morgan Moran characterized the company as “a great business with a bad balance sheet.” She said what makes the balance sheet bad is its proportion of debt, but she wouldn’t elaborate on what its debt ratio is or why its debt is high.

Documents filed Thursday didn’t show the amount Antioch owes to creditors, but did show it has up to 49 creditors.

Since August The Antioch Co. has not made stock option payments to its employees, Morgan Moran said. She would not say how many employees have not received the payments or how many payments it has missed.

An Aug. 8 letter to Antioch employees explains that a technical violation of loan agreements with lenders prevented Antioch from making Aug. 1 employee stock option note payments. Those payments are insured by Condor Guaranty Inc., according to the letter.

Morgan Moran said the bankruptcy protection filing and financial restructuring should help clear up this problem, but she wouldn’t elaborate on the stock option situation.

Antioch is working on an “aggressive restructuring strategy,” according to the letter. Morgan Moran said it hired industry experts and others to look at how to manage the business better. “We have been looking at all kinds of dynamics in the business,” she said.

Two years ago Creative Memories entered the digital scrapbooking market. Morgan Moran said that part of the business has grown 40 percent to 50 percent per year.

Earlier this fall Antioch moved its headquarters, including finance and human resources departments, from Yellow Springs, Ohio, to St. Cloud.

Creative Memories, which owns six facilities around the world and does business in several countries, has been a point of pride for the community. Creative Memories has 800 employees worldwide.
Tom Moore, president of the St. Cloud Area Economic Development Partnership, said the announcement was disappointing and surprising.

“You never like to hear that someone’s going to file bankruptcy,” he said. “At the same time, if this protects the company’s long-range ability to continue to operate and continue to employ people, maybe there are some (opportunities).”

Employees were asked not to speak to the media, said Chandra Attiken, vice president of human resources for the company.

Times reporter Kari Petrie contributed to this report.

Careers In Restructuring and Turnaround