UPDATE: More questions than answers after Maine Cottage Furniture closes; bank begins liquidation
YARMOUTH — Government officials and customers are wondering what happened after Maine Cottage Furniture, a nationally known retailer, abruptly closed with no public explanation.
Customers who have paid for furniture are not expected to get their money back after the company's lender, KeyBank of Albany, N.Y., foreclosed on the business. The bank's attorney said Maine Cottage is being liquidated.
Not only is the flagship store at 106 Lafayette St. closed, but stores in Charleston, S.C., and West Palm Beach, Fla., have closed, too. Calls to all three locations were answered by a recorded message indicating the lines were being checked for trouble.
Opened in 1988 by Peter and Carol Bass, Maine Cottage Furniture sold custom-made furniture and other home accessories. Peter Bass, who is still a part owner of the business and is also a contributing editor at Maine Boats Homes & Harbors magazine in Rockland, did not return a phone call.
Former employee Ann Kistler of Yarmouth said she couldn't say anything except "we all went to work and everyone was laid off."
Carolyn Schuster, managing director of the Yarmouth Chamber of Commerce, said she receives about a dozen calls a day from customers about the business. Employees at Town Hall and the Police Department have been fielding calls, too.
"We tell people to contact the (Maine) attorney general's office," Deputy Tax Collector Sue Swanson said.
According to Martha Demeritt, executive assistant and legislative liaison at the Office of the Attorney General, the business ran out of money because of the economy.
Maine Cottage has not filed for bankruptcy protection, although Demeritt said KeyBank of Albany, N.Y., took possession of the business. She said it appears nothing criminal has happened, but the AG has received about a dozen calls and complaints from customers in the past month.
Tara Hildreth of Cumberland is one of those customers.
Hildreth said she saved $2,500 to buy a table from Maine Cottage Furniture and found there were problems with the legs. She said she worked with someone in customer service and was told she could return the table for money or a store credit.
"I thought I'd be gracious and take the store credit," she said.
The table was picked up on Feb. 14. A few weeks later she was told there was a sign on the store that it was temporarily closed. She said she waited a few more weeks and when she returned last week to use her store credit, a sign on the door said the business is rebranding and remodeling and would reopen in the spring.
"It gave me hope," she said.
But after she made several calls to the store, heard out-of-service recordings and couldn't reach anyone via the company website, she called the attorney general's office. They referred her to attorney Jacob Manheimer at Pierce Atwood in Portland, who represents KeyBank.
"He basically told me I was out of luck," she said. "He said the table belongs to KeyBank now. I saved $2,500 for nothing."
According to the law firm's website, Manheimer represents creditors and debtors in complex Chapter 11 reorganizations, out-of-court workouts and collection matters, and "is experienced in developing and implementing 'exit strategies' for commercial lenders."
Manheimer on Wednesday said KeyBank is taking possession and control of the business and will liquidate the assets.
“They will apply the proceeds to the outstanding obligations of Maine Cottage,” he said.
As for the people who have ordered from Maine Cottage, Manheimer said if the items have been paid for in full and are on hand, customers can take what is theirs.
He said there are about a dozen customers in that situation.
There may be more people who have made deposits for furniture, but Manheimer said he is unaware of how many people are in that situation and how much money they may have deposited.
“I don't represent the company,” he said.
Demeritt also said customers who have made deposits for furniture that hasn't been built will not get their furniture and are not likely to get their money back.
"The customers are probably not going to see any money," she said. "The bank comes first, then secured creditors. Unfortunately, there is no recourse for customers in these situations."
Brian Haddock, president of Furniturea in Portland – a company that makes some of the furniture sold by Maine Cottage – said the situation has not been handled well.
"(KeyBank has) been in control and have not done a good job," he said. "Customers have lost hundreds of thousands of dollars and that's on KeyBank's shoulders. Every vendor I know has lost money."
Haddock said the fact that Maine Cottage Furniture has closed is bad for everyone involved. There is bank debt, spending debt and customer debt, he said.
"There is no value here," he said. "It's a combination of a little bad luck, bad attitude and bad management on the bank's part. It's the end of the line and it is all the bank's stuff now. It's too bad."
Therese Myers, vice president and director of public relations at KeyBank, said because the bank deals with the business and not its customers, there is little to say to those who have made deposits on furniture.
"Due to privacy constraints, we do not talk about foreclosure matters," she said.
John Tarling, one of Maine Cottage's landlords, said he still believes the store will only be closed temporarily and expected to hear some statement "in a matter of days or weeks."
"Watch the website," he said.
Amy Anderson can be reached at 781-3661 ext. 110 or firstname.lastname@example.org
This report was updated on Wednesday, March 23, 2011.