Robinett Copier and Mailing files for Chapter 11

For three years, Mark Robinett of Robinett Copier and Mailing Solutions LLC deliberately avoided filing for Chapter 11 bankruptcy.

He thought he was doing the right thing by hiring a Colorado firm to settle tax claims filed by the Internal Revenue Service.

Robinett now believes he should have pursued a court-approved debt reorganization plan much earlier. He voluntarily filed for Chapter 11 bankruptcy Sept. 26 in U.S. Bankruptcy Court.

Robinett’s bankruptcy attorney, David Schroeder, said the company racked up more than $900,000 in debt partially accrued during a post-Sept. 11, 2001 slump.

“Don’t hire those guys on TV that say they can settle these things for pennies on the dollar,” Robinett said. “One of the things that they do a good job of is dragging it out for a long time.”

Robinett said he wished he had followed the advice of Office Concepts owner Steve Moore, whose business successfully emerged from Chapter 11 bankruptcy in 2003. Schroeder also handled the Office Concepts bankruptcy case.

Robinett said Schroeder enlightened him about the advantages of filing for Chapter 11 bankruptcy, which is designed to help companies rebound from significant debt. Companies that file for Chapter 7 bankruptcy effectively go out of business and must liquidate assets to pay off debt.

“There are people that go into Chapter 11 that are in deep doo-doo,” Robinett said. “We are not.”

IRS debt

By choosing Chapter 11, companies immediately stop accruing penalties and interest on tax claims, which improves cash flow. Robinett said that’s especially beneficial for his company, which owes the IRS some $260,000 in back taxes, penalties and interest.

Robinett said the company lost several accounts in the economic downturn after Sept. 11 and fell behind on its payments to the IRS, equipment manufacturers and media companies for advertising.

“We don’t write off hardly any bad debt at all … but after 9/11, we had probably 20 different customers go bankrupt or go out of business,” he said. “Some of them were pretty good chunks of change.”

The company, which sells and services office machines and mailing equipment, must first settle large debts with secured creditors Konica Minolta and Great Southern Bank. Robinett said his monthly payments to Great Southern will drop from $7,100 to about $3,500, and those to Konica Minolta will be reduced from $5,700 to about $4,200. The revised payment plans will enable Robinett to pay back the debts over three years, Schroeder said.

Robinett’s largest unsecured creditor is San Francisco-based Neopost Inc., which manufactures mailing equipment. Neopost has a claim of more than $40,000, said Schroeder, who expects to file a debt reorganization plan within 90 days.

Before the plan is approved, Robinett must file monthly reports and follow court-imposed guidelines, Schroeder said. The rigidly structured approach often helps debt-stricken companies identify ways to increase revenue and cut expenses, he added.

Holding on

Despite tax liens and bankruptcy proceedings, Robinett is expecting a banner year with an estimated gross profit of $350,000 before taxes. The company is projecting $3.5 million in sales revenue this year, up from about $3 million last year.

Robinett said competitors “dancing a little jig” in response to his company’s debt troubles will be disappointed to learn his 2006 profits are three times higher than they’ve ever been.

“Profit up and debt service down makes one a happy camper,” he said.

The company has, however, missed out on new accounts because customers were leery of the pending bankruptcy, Robinett said.

On the plus side, mounting debt has forced the company to run leaner, he added. The reliability of newer-model digital copiers has allowed Robinett to reduce the number of copier technicians from 11 to seven through attrition.

Three mailing technicians and six salespeople are also among the company’s 26 full-time employees. Robinett, who said he’s negotiating with a Hewlett-Packard dealer to carry HP digital printers, recently promoted David Hemphill to vice president of sales and Scott Hewlett to general manager.

“As soon as this plan gets approved, Marky goes back into semiretirement,” he said.