Liberty House exec:
Chain can beat
bankruptcy

JMB remains committed,
he says

By Peter Wagner
Star-Bulletin

At 36, he's the youngest member of the "old" Liberty House board of directors.

Steven E. Plonsker, executive vice president of JMB Realty Corp. and vice president of Liberty House, says the struggling retailer can beat bankruptcy. But not if a "new" board appointed by the Bank of America Group succeeds in taking over the company.

"You've got to look at the differences between the two boards and what the nature is of each board," Plonsker told the Star-Bulletin today during a visit from his native Chicago. "JMB has been involved with the company for 10 years. We've supported the company through thick and thin most recently through thin and we expect the company to reorganize and work its way through this economic crisis."

He notes JMB has put more than $100 million into Liberty House since buying the company and its parent Amfac Inc. in 1988.

Plonsker and members of what he calls "the legitimate" Liberty House board of directors filed for Chapter 11 bankruptcy protection March 19 after its principal lenders, led by Bank of America, tried to take control of the company by appointing a new board of directors.

A legal battle over which board is in control of the company is pending in U.S. District Court in Honolulu.

Meanwhile, Plonsker and colleagues on the original board worry about losing control of Liberty House and its assets.

"The current bank group is comprised of a couple of members from the original lending group plus a lot of distressed debt or vulture group traders they brought in in 1997," Plonsker said. "We think they have a shorter-term focus than we do and want to make a quick profit and get out."

He notes the three members of the newly appointed board of directors have had experience with property liquidations.

But Bank of America Group attorney Tom Roesser counters the directors also have experience with successful business reorganizations.

"What everybody would like is for Liberty House to successfully reorganize as a going concern and satisfy all its creditors," Roesser said in reaction to Plonsker's comments. "Obviously, that's going to depend on Liberty House's performance."

Roesser notes the new board recently facilitated a $50 million "debtor in possession" loan package from Bank of America Group to help Liberty House on the road to recovery.

Plonsker blames Liberty House's woes on Hawaii's sour economy and the recent Asian downturn.

But with time and renewed efforts, the 150-year-old retailer can emerge a winner, he said. "Eventually, those things will turn around. We think it can come out of bankruptcy stronger than when it went in."