Majors

Midwest Pawnbroker Files for Bankruptcy

MajorsApr 18, 2017

Midwest Pawnbroker Files for Bankruptcy

Pawn America, which has 23 stores in four states, filed for Chapter 11 and says it will reorganize and emerge.

Burnsville, Minn.--Pawn America has filed for Chapter 11 voluntary bankruptcy protection but plans to reorganize and emerge, the company said Monday.

The Burnsville, Minnesota-based pawnbroker filed April 12 in U.S. Bankruptcy Court for the District of Minnesota, citing $10 to $50 million in estimated assets but an equal amount in estimated liabilities.

The company’s bankruptcy filing also shows that it has between 200 and 999 creditors and expects to be able to have funds to distribute to unsecured creditors.

Company spokesman Mike Erlandson said Monday that no decisions have been made regarding store closures or layoffs, though the press release announcing the Chapter 11 filing noted that in bankruptcy, the company will “strengthen its balance sheet, optimize its footprint and aggressively manage the real estate lease portfolio.”

Erlandson said Pawn America is facing a lot of the same challenges as other brick-and-mortar businesses.

“A pawn store is a retail store. It just happens to be secondhand retail,” he said. “If you look at the retail sector over the course of the last several years, there have been a number of companies that are household names … that have had to do restructuring.”

Chief among them are Macy’s, which is set to close 14 percent of its full-line stores this year, Sears, and J.C. Penney, which also plans to shutter about 14 percent of its stores.

Erlandson added that the company relaunched its website last year and began selling all products online instead of just select categories. “There’s no question that there’s going to be a lot that goes into trying to drive sales through the website,” he said.

Company President Brad Rixmann opened the first Pawn America store in Robbinsdale, Minnesota, in 1991.

Today, there are a total of 23 Pawn America locations (there were 24 until last year, when one closed) in four states: Minnesota, Wisconsin, North Dakota and South Dakota.

The company that operates the pawn store chain also owns cash advance company PayDay America, pre-paid card company CashPass, and My Bridge Now, a company that provides short-term collateral loans.

Erlandson said the range of fine jewelry sold by Pawn America is “significant” and includes “Signature,” its own line of sterling silver stackable rings featuring colored gemstones that launched in early 2016.

Stinson Leonard Street LLP will act as the company’s legal adviser for the Chapter 11 process while Alliance Management is its restructuring adviser.

Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

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