MOUNTVILLE, Pa. -- In business since 1865 and one of the top 20 convenience store distributors in the country, Cooper-Booth Wholesale Co. LP, a wholesaler in the Mid-Atlantic region, has become collateral damage over an investigation and indictments in the state of New York involving cigarettes it sold to a customer, smuggled into the Empire State and sold without tax stamps. The federal government froze Cooper-Booth's main bank account, which has forced it to declare Chapter 11 bankruptcy on May 21, executives said.
See the related story for details on the cigarette smuggling investigation and indictments.
According to the bankruptcy court declaration of Barry Margolis, Mountville, Va.-based Cooper-Booth's president and CEO, Cooper-Booth and its two corporate partners "were experiencing sales growth, were operating profitably and the future was bright and prosperous."
The bankruptcy was not in response to the company's business practices; rather, they were the "victims of unfortunate circumstances."
As reported in a Raymond James/CSP Daily News Flash on Thursday, those circumstances involved the cigarette smuggling operation allegedly run by agents of its unnamed customer, who have been accused of smuggling Virginia stamped cigarettes into the higher-taxed state of New York. While investigating the operation, the government issued a seizure warrant for Cooper-Booth's account with PNC Bank, effectively freezing the company's funds.
"As part of this investigation, the U.S. government … seized the main operating account of the wholesaler debtor [Cooper-Booth] at PNC to recover payments for merchandise made by the customer that was arrested, putting the company in the precarious position of not being able to access funds to run the day-to-day operations of the business," Margolis said. "We had no knowledge that the account had been seized until the next day when we received notice from PNC that payments and wires we had initiated were being returned because our account had been frozen."
In response to the seizure, PNC Bank declared Cooper-Booth in default of itsr pre-petition credit facilities and terminated the company's line of credit.
It took just 72 hours for Cooper-Booth to decide the company's best option was to file for bankruptcy protection under Chapter 11. Margolis said this was done so Cooper-Booth (and its corporate partners) "can protect their assets while they reorganize their affairs under the provision of the Bankruptcy Code."
The company--not implicated in any wrongdoing--"is seeking to assure its customers that, despite commencing this Chapter 11 case, [it] will nevertheless continue to operate business consistent with past practice and with the same level of reliability and integrity for which they are well known."
Neither Margolis nor representatives of Copper-Booth responded to a CSP Daily News request for comment by press time.
Family owned and operated Cooper-Booth has been in the wholesale distribution business since 1865 when the Booth Tobacco Co. was incorporated in Lancaster, Pa. The company continued to grow with the acquisition of Cooper Tobacco and a number of other distributors over the years. It is now a full-line, full-service wholesale distributor serving retailers in the Mid-Atlantic region. Its full line consists of more than 10,000 items. Services and programs include scheduled store visits, merchandising, shelf labels, electronic order entry processing, accrual programs and more.
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