After struggling with cash flow and dealing with changes in leadership over the years, Seattle-based Tully’s Coffee has filed for Chapter 11 bankruptcy protection.
The bankruptcy papers were filed in federal court in Seattle Wednesday. There will be a court hearing Friday. The bankruptcy filing listed $5.9 million in personal property as the company’s only assets and $3.7 million in total liabilities, including $2.6 million in unsecured credit.
Tom “Tully” O’Keefe started the coffee chain in 1992, proclaiming its coffee didn’t have the dark, bitter taste of a Starbucks cup of coffee. Since then the coffee chain had cash-flow issues and management changes that prevented the company from distinguishing itself.
O’Keefe’s response, in an emailed statement:
“It is a sad day in the history of Tully’s; for its shareholders, employees and customers. Suffice it to say that the most important aspect of managing a business, or serving on its board of directors, is to protect the owners of the business, its shareholders, and make decisions in their best interest. Once I have had a chance to review the filing with my advisors I will be in a better position to comment.”
In an April 2011 one-on-one interview with O’Keefe, he didn’t add any sugar to the company’s history.
O’Keefe says Tully’s burned through cash as it tried to expand, and he admits they made some bad hiring decisions after he stepped down as CEO.
“We’ve had a few leaders in the past that, God I’d love to meet their kids because I can’t imagine these people were ever compassionate towards their kids needs because they just beat the hell out of our employees,” he says.
In 2010, O’Keefe took himself out of his own company, although he remains the largest shareholder.
“In one way, leaving was one of the most difficult decisions I’ve ever made, in another way it was the easiest thing because I was going to kill someone,” he half jokes. “The problem was I was concerned it was going to be me.”
When I talked with O’Keefe a year ago he was optimistic about Scott Pearson as a new leader.
O’Keefe describes Pearson as someone who is “refreshing” with “great ethics” who cares about employees and shareholders. Pearson has a background with Coca Cola and IBM, and most recently was executive vice president at Advanced H2O, a local bottled water company. Pearson started his new job April 1, 2011 with a lot of work to do.
Now Tully’s, which has been closing stores around the country, will close stores in Wallingford, Madison Park, Columbia Tower, Fourth Avenue and Union Street in Seattle Sunday. They’ll also close the doors on stores in Redmond and Kirkland.
Podcast: Tom Tully O’Keefe discussing why he stepped down from the company he started, and what he’s been doing since.
By LINDA THOMAS, I don’t drink coffee but I liked the Tully’s in Ballard that closed a while ago.