Customers may be last in line for payments owed by Joliet-based Grant's

JOLIET – When Carla Bison goes into a store, she wonders – maybe even fears a little – will it close, and take my money with it?

That's what happened to the St. Charles resident when she spent $3,275 on appliances at a Grant's Appliances store in Aurora.

The Joliet-based electronics and appliances retailer closed in October because of ballooning debt, which the company plans to pay off through a process similar to bankruptcy.

It appears that many customers who bought TVs, refrigerators and stoves in the last days of Grant’s will never see their appliances – or their money.

“It’s like being robbed, violated,” Bison said. “… Someone took my hard-earned money … somebody just stole my money. So, I’m sad, I’m angry and I’m very frustrated.”

Customers were left clueless as to how to get their purchases or money back until the Illinois Attorney General's Office announced Nov. 5 the company was undergoing an assignment for benefit of creditors to distribute the assets.

The company distributing Grant’s assets has sent a letter to customers saying that as of Oct. 23, it appears Grant’s has more than twice as much debt as assets. Customers are unlikely to get anything.

The notice from High Ridge Partners Inc. states that once payments are made to holders of security interest and liens, “no assets will remain for Grant’s employee wage claims, unpaid taxes, or unsecured creditors including, without limitation, those customers who paid deposits but who have not received the merchandise they ordered.”

One customer, Joe Nurczyk of Joliet, got only a microwave out of the almost $3,000 he spent for multiple appliances. After calling the local authorities and getting nowhere, he said he’s not interested in getting the rest of the appliances or any money back.

“I’m counting it as a loss. I know we’ll probably get pennies on the dollar,” he said.

Customers were instructed to file a claim for money spent, but many are not optimistic they’ll get back what they paid. Many consumer advocacy experts agree customers may not get much compared to the lenders and banks demanding money from Grant’s.

One expert found it deceptive that Grant’s accepted money for purchases until the time it closed – as one employee said happened – but was not certain that it was fraud.

Customers last in line

The mystery behind Grant’s closing its five stores in the Chicago area and Indiana on Oct. 8 remained unsolved for weeks until the Illinois Attorney General Office’s announcement. The attorney general had received 49 complaints as of Nov. 21. In Indiana, where Grant’s also had a store, the attorney general had six complaints as of Nov. 18.

One clue was a sign on the door of the Joliet location that said: “Temporarily closed for inventory.” Company representatives – including owners Robert Wysocki and George Olsen – along with their attorney have remained silent since then, despite repeated attempts to reach them since Oct. 9.

With the company dissolving its business to pay off creditors through a general assignment process – similar to a bankruptcy – it’s now possible customers could receive their money.

But it’s not likely.

Grant’s assets have been turned over to assignees with High Ridge Partners Inc., which will distribute them among creditors, including customers. Several calls made to assignees with High Ridge Partners were not returned.

But according to the letter sent to customers, Grant’s unverified and unaudited assets stand at about $6.3 million, while the company has liabilities, or debts, of about $15 million.

Ira Rheingold, executive director of the National Association of Consumer Advocates, said he wasn’t too familiar with the general assignment process, but in the context of a bankruptcy, customers are last in line to receive their share of the assets.

“Consumers are just another form of creditor. … And the question is as a creditor, how much will they get back?” he said.

That could depend on how claims are processed, how much money is left and where they fall in line when that money is distributed, he said.

“Is it fair? Absolutely not. … In the context of a bankruptcy, consumers always get the short shrift. They are on the lowest end of the credit chain for sure,” Rheingold said.

With the Illinois Attorney General’s Office being involved, he said it’s possible the distribution of assets will be more fair. Rheingold said the Illinois Attorney General’s office is very consumer friendly.

A company might undergo a general assignment because it’s a more expedient way to liquidate assets, said Dennis Horton, director for the Rockford branch of the Better Business Bureau. He said it happens fairly frequently with companies shutting down.

Linda Sherry, Consumer Action spokeswoman, said the situation is unfair for customers, but any time they make large purchases, they should use a credit card. That helps in case a company goes bankrupt.

“Otherwise, you’re a creditor in a bankruptcy and you have to stand in line, and chances are slim you get something back,” she said.

Not necessarily fraud

Experts could not determine if what Grant’s did could be considered consumer fraud, even though many customers might think so. Horton said it was difficult to determine, since an intent to defraud people must be proven.

“Because they have set up this assignment, that in and of itself says they don’t intend to defraud their creditors,” he said.

Rheingold said the company clearly violated the terms of its agreements with customers, but he wasn’t certain if that constituted consumer fraud. Customers are “certainly getting screwed here, but there’s different degrees of these kind of things,” he said.

Sherry said she wouldn’t call it fraud if the company knew it was going to close its stores months in advance yet continued to do business.

But it was deceptive.

“It wouldn’t necessarily be fraud per se, because it’s not like the company could keep its gains. It has to pay out. It’s got creditors lining up at the door,” she said.

‘They had to see it coming’

One former Grant’s employee wonders if the owners were honest with customers and workers alike.

Bob Tarman, a general manager for the Aurora branch before the stores closed in October, said the company did not tell employees they were going to be laid off before Oct. 8. Instead, the owners sent emails about the company’s shaky financial situation with a senior lender.

He said the stores were kept open until 9 p.m. Oct. 8.

“Things like this just don’t happen overnight. They had to see it coming. But yet they were still taking money from customers,” he said.

Tarman was lucky, landing a position with Glenview-based Abt Electronics about the time he was laid off. But other employees were not. He said the company owes employees at least two paychecks, including one withheld from them when they first start working at Grant’s.

His Aurora shop was a tight-knit group of six employees, but he estimates there are about 55 company-wide. He said he was contacted by the company’s human resources director, who is gathering employees to take legal action, but declined to join since he’s moved on.

He said he feels sad about what happened to the customers.

“It sucks to see that happen. … It’s just such a sad story,” he said.

Company troubles

Grant’s Appliances has undergone a decline since 2008, when the recession hit, according to the notice sent to customers from High Ridge Partners. Grant’s attempted to stem losses by reducing the number of its retail locations from 12 to five, incurring large liabilities to landlords of the stores. That, combined with declines in sales and profits, left Grant’s without sufficient funds.

Tarman said Grant’s credit lines were maxed out with manufacturers such as Whirlpool. The credit line allows stores to order a product and pay that money back in 30 days. Manufacturers were not shipping out products as a result.

“We started to be limited on the products we could get and what we could sell,” he said.

There were management issues at the company as well, Tarman said. There was no leadership among employees, many of whom were leaving and not being replaced.

One event Tarman said probably helped drive the company into the ground was the promotional rebate program several years ago that resulted in customer lawsuits.

In 2012, Grant’s agreed to pay $600,000 in a settlement with customers who sued in 2010. In the lawsuit, the complainants alleged Grant’s promised customers a $500 rebate for gas and groceries if they registered for the company’s promotional rebate program and spent more than $399 at its stores.

Customers said they didn’t receive the rebates as promised. Grant’s agreed to a settlement, but denied allegations of wrongdoing.

Throwing good money after bad

According to an attorney who represented one of the clients in the settlement, the money has been paid to the customers. But since Grant’s closed, it’s only seen more legal trouble.

Two customers – Marion Fuller of Joliet and Wally Kaczmarczyk of Lemont — are suing the company for losses amounting to $568 and $10,000, respectively. But both are considering letting the matter go, since they’ll only spend more money on legal fees. The summons issued in the cases also have not been successfully delivered to Grant’s owners.

“That’s like throwing good money after bad money,” Fuller said.

Kaczmarczyk is one customer determined to get his money back: He visited the Naperville home of Wysocki, one of the owners. But nobody answered the door and there was a for-sale sign on the lawn.

A Will County lawsuit filed by a lender against Grant's lists addresses for owners Wysocki and Olsen in Naples, Florida.

Bison and another customer – Joy Tinsman of New Lenox, who lost more than $20,000 worth in appliances – feel the same way. Bison said she is seeking free legal assistance to see what can be done, but Tinsman is not optimistic.

“You probably don’t want to sue because you’re going to end up incurring legal fees, probably still won’t get what you want back. So, damned if we do, damned if we don’t,” she said.

Tinsman said she believes Grant’s owners deliberately took their money.

“They’re using the people’s money. It’s being used to pay off their debt, which is wrong,” she said. “I don’t know how else I can put it. It’s wrong.”