Chain of Popular Portrait Studios Files for Chapter 7 Bankruptcy
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Chain of Popular Portrait Studios Files for Chapter 7 Bankruptcy

May 3, 2013


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CPI Corp., the struggling operator of portrait studios housed in major U.S. retail chains, including Walmart and Sears, is looking for bankruptcy help, according to a report from the Wall Street Journal.

According to sources, CPI Corp. filed for bankruptcy May 1 in Delaware, and claimed in bankruptcy documents that it has $135 million in debt and only $10.4 worth of assets.

Sources say the bankruptcy filing does not come as much of a surprise, as the company closed all of its locations in the United States on April 4 due to a long pattern of operating losses.

The company’s decision to close its doors had dire effects for a number of people, as more than 4,300 employees were laid off with little notice, according to sources.

And the company’s abrupt closure also had a negative impact on its customers, many of whom are trying to determine how they will access their photographs.

But sources also note that CPI Corp. had been headed for Chapter 7 bankruptcy for months, as its company was in something of a financial tailspin, with many of its lenders already claiming that it was in default.

The company’s largest creditors include Fifth Third Bank, Associated Bank, Private Bank, and Bank of America, which collectively account for more than $90 million of the debt that CPI Corp. is hoping to discharge in its bankruptcy.

The filing ends a remarkable run of success for a company that operated relatively cheap portrait studios in big box stores across the country. At the height of its success, CPI Corp. had studios in more than 2,700 locations across the United States and Canada.

But the success proved hard to maintain, as the recent recession led many consumers to delay portrait purchases until their financial health improved while cheaper consumer cameras made destination photography less essential.

In addition to lagging demand, the company also faced a pending lawsuit from 100 former employees who claim CPI Corp. owes them a significant amount of back pay from paid vacations.

The lawsuit also alleges that the company failed to give its workers adequate notice of its closure, as required by the Worker Adjustment and Retraining Notification Act.

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