Jennifer Cousineau, a psychology sophomore, hasn’t lived in East Lansing long but already has established a firm relationship with Jacobson Stores, Inc.
“I like it because it has a lot of designer brands that are hard to find,” the California native said. “There’s not really anywhere around that carries the designer brands.”
Cousineau’s access to the most fashionable brands could now be in jeopardy, since the company filed for Chapter 11 bankruptcy Tuesday after disappointing third-quarter figures, said Frederick Marx, spokesman for the company.
“If you were to look back when the company released their third-quarter earnings at that point they disclosed that they were having some financial challenges,” he said.
It already has begun to make changes, cutting 520 jobs and closing five stores, in order to reverse the trends of last year.
Though many of the stores will continue on with business as usual, the corporation as a whole will start anew, Marx said.
“Basically, it’s a new company, a new beginning,” he said. “They’ll be able to continue their operations without interruption.”
Jacobson’s maintains seven stores in Michigan after removing one in Saginaw in June.
The company’s East Lansing store moved to Meridian Mall in Okemos in 2000.
That store is not in danger of being downsized, Marx said.
“None of (the stores being closed) are in Michigan, they’re all in Florida and Ohio,” he said. “The store in Meridian is one of our best performing stores, it doesn’t change at all.”
Jacobson’s had reached an agreement with its creditors in December, allowing it to continue its operations even with the disappointing financial figures, Marx said.
The company expects the store closures in Ohio and Florida to revitalize the company, Marx said.
Many companies take the same course of action when faced with bankruptcy, said C. Nicholas Revelos, a professor at MSU-Detroit College of Law.
“The key thing is to get creditor agreement to work with their debt and continue to operate,” he said.
“Typically, it means closing down some stores and getting rid of some employees that are somewhat burdensome.”
While the company works through its revival plan, the bankruptcy filing will give Jacobson’s a reprieve from its creditors.
While a majority of companies do not survive the revival process, Jacobson’s could have a better than average chance at pulling through, Revelos said.
“The success rate is somewhere about 37 percent for companies to reorganize after Chapter 11,” he said. “So for a company of Jacobson’s history, the prospect is probably pretty good that they can reorganize.”
But for East Lansing residents who remember the presence of the store, the outlook isn’t as good for the storefront that dominated Grand River Avenue.
“I like to have a place like that in town, a place where they sell good clothing and general items,” said Gwyneth Schroeder, an East Lansing resident.
