Archiver's Files Chapter 11 Bankruptcy

Major scrapbook retail chain Archiver's filed for Chapter 11 bankruptcy Monday in U.S. Bankruptcy Court in Minnesota.

The Archiver's board authorized the bankruptcy filing on April 25th via a written directive. In court filings, the retailer indicates that it intends to continue operating. The initial petition estimates the company has between $10-$50 million in assets, and $1-$10 million in liabilities, and indicates that the company believes there will be at least some funds available for distribution to unsecured creditors.

As a retailer, it's not surprising that a large portion of the company's top 20 unsecured creditors are product wholesalers. The largest unsecured creditor is EK Success, who is owed over $250,000. Also appearing on the top 20 creditors list are American Crafts, 3L, We R Memory Keepers, My Mind's Eye, Bazzill, Love To Scrap, Doodlebug, BoBunny, Ranger, Silhouette, Pioneer, Pink Paislee, Ellison, and Queen & Company, who are owed between $55,000 and $200,000 each. The Archiver's bankruptcy is a double hit for 3L, who was already listed as one of the top creditors in the Creative Memories bankruptcy a few weeks ago.

A meeting of creditors is scheduled for May 30th at the US Courthouse in Minneapolis. Proof of claims from creditors are due to the court by August 28th, an important deadline since the petition estimates that there will be funds to disperse to the creditors who submit claims.

Archiver's is headquartered outside of Minneapolis and currently has 40 stores spread across 18 states. In the past seven months, the company has closed five store locations: Algonquin, IL; Fort Wayne, IN; South Austin, TX; Aurora, CO; and Memphis, TN. One of those locations, South Austin, had only been open a little over eight months when its closure was announced on April 2nd.

In their public statement about the bankruptcy, Archiver's blamed technology for causing a declining scrapbook industry, but expressed optimism about the future:

We took this step to give us the time needed to make necessary changes in our business. Please be assured Archiver’s is not going out of business – quite the contrary, we’re making it better.

As with many retailers, the past few years have been difficult for us. This has been due in part to the recession, but also to the increased use and ease of digital technology, causing a segment of our customers to look elsewhere for ways to enjoy, share and preserve their memories. The result has been a sharp decline in the purchase of scrapbook and memory craft products, the core of our business. So, we must recognize the changing needs of our customers and adapt accordingly.

The changes we’re making are the result of several months of evaluating our business and learning from our customers about the ways in which Archiver’s can be improved. The introduction of Archiver’s Memory Lab™ is the most obvious and important addition, and you’ll find that it’s a great way to help you access and enjoy your photos and memories. Over the next several weeks you’ll see other changes as well, from our website redesign to new merchandise assortments. We encourage you to come see the new, improved Archiver’s, and we thank you for your past – and future – business.

The company seems to be putting a lot of its future in the new Memory Lab service, which offers printing, copying, scanning and photo gifts. The parallel to the Creative Memories bankruptcies is startling - and noteworthy. During that company's 2008 bankruptcy, they planned for future growth for the company based largely on projections of success of their digital offerings such as their Memory Manager software. But a few weeks ago, Creative Memories was back in bankruptcy court again. In the new court filings, Creative Memories is specifically citing the failure of their digital products in a market where they were up against established brands such as Shutterfly for the failure to meet the projections of their first bankruptcy plan.

Update: In a Facebook statement late this afternoon, Archiver's says that it has no plans to cancel Scrapfest, which is scheduled for Sept. 20th-22nd, at Mall of America.