A customer shops in the former Freebird store in the Cherry Creek Shopping Center on March 6, 2017. (Helen Richardson/The Denver Post)
Freebird, the Denver-based boot retailer whose 21 stores include a flagship in Cherry Creek, is deeply in debt, behind on rent and at risk of not making payroll, its bank says.
For those reasons, a judge has appointed a receiver to run the 16-year-old business.
“(Freebird) is facing an immediate liquidity crisis,” Judge Jill Dorancy wrote May 20.
“The appointment of the receiver for the company is necessary to protect, preserve and maintain the value of (KeyBank’s) collateral and Freebird’s business,” she ruled.
KeyBank claims it is owed $15.4 million from Freebird, which can’t order new boots from its supplier in Mexico until it pays $3 million in invoices, according to the lender. Freebird boots are handmade and range in price from $200 to $400, the company website states.
“KeyBank has serious concerns regarding the borrower’s ability to continue to further meet its ordinary course obligations, to pay debts as they become due, and to continue its business,” the bank, which has a regional headquarters here, wrote in a Denver District Court lawsuit.
Reached by phone last week, Freebird vice president of retail operations Mark Cardinale said that either he or CEO Mike Murphy would agree to an interview, but Cardinale did not answer follow-up calls. Murphy, who personally guaranteed the loans, is also being sued by KeyBank.
“We are trying to dig into everything ourselves at this moment,” Cardinale told BusinessDen May 20. “We are talking to the attorneys, trying to understand everything.”
Denver-based Freebird has 21 stores. (Courtesy of Freebird)
KeyBank’s history of loans to Freebird show a snowballing of debt, from an initial $7.5 million in 2021 to more than $15 million today. Over time, the collateral for the loans grew to include Freebird’s entire business, Murphy’s $4 million home in Hilltop and an apartment in downtown Nashville, Tennessee. The full $15.4 million came due April 15, according to KeyBank.
“Borrower does not have the operating capital necessary to maintain its business as a going concern,” the bank says of Freebird. “The nature of the borrower’s business as a retailer increases the risk of KeyBank’s secured interest in the borrower’s assets substantially eroding if the borrower defaults on its various lease obligations and/or payroll obligations.”
“Borrower, according to its own financial projections, is estimated to run out of operating cash in the very near future,” according to KeyBank’s lawsuit, which was filed May 13.
Ampleo, a Utah-based turnaround and restructuring company, will be paid $365 an hour to run Freebird. It has the power to close stores, liquidate supplies and lay off employees.
Dorancy, the judge, granted KeyBank’s request for a receiver in an ex parte fashion, meaning it was approved before Freebird or its lawyers were able to respond to the idea in court. She decided that by the time Freebird would be served the lawsuit and “afforded an opportunity to respond, KeyBank’s interest in the collateral would be substantially, if not entirely, eroded.”
KeyBank’s lawsuit is the second filed against Freebird in Denver this year. In January, the landlord of Freebird’s former warehouse at 12655 E. 42nd Ave. sued its ex-tenant for $75,000 in back rent. That landlord, Invesco Real Estate, dropped the matter in March.
A customer shops in the former Freebird store in the Cherry Creek Shopping Center on March 6, 2017. (Helen Richardson/The Denver Post)
Freebird, the Denver-based boot retailer whose 21 stores include a flagship in Cherry Creek, is deeply in debt, behind on rent and at risk of not making payroll, its bank says.
For those reasons, a judge has appointed a receiver to run the 16-year-old business.
“(Freebird) is facing an immediate liquidity crisis,” Judge Jill Dorancy wrote May 20.
“The appointment of the receiver for the company is necessary to protect, preserve and maintain the value of (KeyBank’s) collateral and Freebird’s business,” she ruled.
KeyBank claims it is owed $15.4 million from Freebird, which can’t order new boots from its supplier in Mexico until it pays $3 million in invoices, according to the lender. Freebird boots are handmade and range in price from $200 to $400, the company website states.
“KeyBank has serious concerns regarding the borrower’s ability to continue to further meet its ordinary course obligations, to pay debts as they become due, and to continue its business,” the bank, which has a regional headquarters here, wrote in a Denver District Court lawsuit.
Reached by phone last week, Freebird vice president of retail operations Mark Cardinale said that either he or CEO Mike Murphy would agree to an interview, but Cardinale did not answer follow-up calls. Murphy, who personally guaranteed the loans, is also being sued by KeyBank.
“We are trying to dig into everything ourselves at this moment,” Cardinale told BusinessDen May 20. “We are talking to the attorneys, trying to understand everything.”
Denver-based Freebird has 21 stores. (Courtesy of Freebird)
KeyBank’s history of loans to Freebird show a snowballing of debt, from an initial $7.5 million in 2021 to more than $15 million today. Over time, the collateral for the loans grew to include Freebird’s entire business, Murphy’s $4 million home in Hilltop and an apartment in downtown Nashville, Tennessee. The full $15.4 million came due April 15, according to KeyBank.
“Borrower does not have the operating capital necessary to maintain its business as a going concern,” the bank says of Freebird. “The nature of the borrower’s business as a retailer increases the risk of KeyBank’s secured interest in the borrower’s assets substantially eroding if the borrower defaults on its various lease obligations and/or payroll obligations.”
“Borrower, according to its own financial projections, is estimated to run out of operating cash in the very near future,” according to KeyBank’s lawsuit, which was filed May 13.
Ampleo, a Utah-based turnaround and restructuring company, will be paid $365 an hour to run Freebird. It has the power to close stores, liquidate supplies and lay off employees.
Dorancy, the judge, granted KeyBank’s request for a receiver in an ex parte fashion, meaning it was approved before Freebird or its lawyers were able to respond to the idea in court. She decided that by the time Freebird would be served the lawsuit and “afforded an opportunity to respond, KeyBank’s interest in the collateral would be substantially, if not entirely, eroded.”
KeyBank’s lawsuit is the second filed against Freebird in Denver this year. In January, the landlord of Freebird’s former warehouse at 12655 E. 42nd Ave. sued its ex-tenant for $75,000 in back rent. That landlord, Invesco Real Estate, dropped the matter in March.
