An LA Times article informed us on Sunday that our favorite late night, gadget-hawking company, Ronco, has filed for Chapter 11 bankruptcy protection. Chapter 11 bankruptcy provides a company protection from its creditors while the company restructures its business and defines a plan to pay its debts. The Simi Valley based Ronco has declared $32.7 million in debt versus $13.9 million in assets (a 2.35 times ratio!).
So, gladly, the joy of a GLH spray-on hair advertisement as the perfect accompaniment to a 4AM burrito will likely continue unabated. Ronco isn't in unchartered waters here, having gone through bankruptcy in the 1980s.
As a point of fact, Ron Popeil, who founded the company in 1958, sold the company two years ago for approximately $55 million and remains the company's largest creditor (owed $11.8 million). The infomercial giant stands ahead of other notable creditors, Food Network, Court TV and the QVC home-shopping network. As part of the Ronco sale two years ago, the current owners continue to use Popeil's image to promote the company. While there are no details from company spokesmen on the underlying financial situation at Ronco, court documents indicate that an initial $40 million payment to Popeil had significant impact to Ronco's cash flow.
Ronco's CEO, John Reiland claimed that none of the 95 employees would be laid off during the bankruptcy period. The LA Times further reports that Ronco has reached a nonbinding agreement with a new buyer. Reiland did not provide details on who that might be, other than saying that it is not Popeil. Popeil, at a spry 72 years old, is apparently working on a home turkey fryer.
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