Gorman's talking with Israels regarding future

September 24, 2010
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A new alliance with another seller of fine furnishings will not come in time to keep Israels Designs for Living from liquidating the merchandise the company has in three separate showrooms. The liquidation sales will continue as part of the firm’s effort to pay off two loans that have been recalled for lack of payment by two banks.

Gorman’s Furniture of Southfield revealed late last week that it had begun talks with the Israels family about establishing an association that would keep the company’s name alive in the region and preserve its status as a seller of high-end furniture.

“Israels has built up an excellent position in the marketplace. It’s a name that commands respect among manufacturers, other retailers, and customers. Decades of hard work have gone into building that legacy; the Israels family has worked their entire lives to earn it. So I’d hate to see it lost, or destroyed by falling into the wrong hands,” said Gorman Chairman and CEO Bernie Moray, in a release.

“I’ve known Bob Israels for decades. If I was in the same kind of trouble that he’s in now, I know he would be there to help me,” he added.

Company CEO David Israels said he wasn’t certain where the alliance discussion would take the firm. But he noted that all the options that would let Gorman’s “leverage the relationships, contacts, reputations, and long-term assets” that Designs for Living has created over the past half-century would be examined.

“What I hope comes out of the discussions is an opportunity for is a quality furnishings store in West Michigan that will take care of the customers’ needs here for future purchases, be able to take care of servicing current orders and things that have been previously sold, opportunities for some of our employees, and perhaps an opportunity for an ownership participation for my brother (Jacob) and myself,” he said.

Israels said the banks were made aware of the ongoing conversation with Gorman’s and added that the discussions hold the potential for a better future. “And most importantly, it is a way to help take care of the customers’ immediate needs and concerns.”

Israels also said that whatever form the alliance takes, Gorman’s will remain committed to the firm’s existing customers. He added that it was in everybody’s best interest, including the banks, that Israels’ customers and manufacturers are taken care of by making sure sales orders get filled. Moray said the goal during this transitional period was to minimize the problems and questions that customers may have.

Fifth Third Bank recently recalled an approximately $8 million loan it made to the firm, while Macatawa Bank took the same action in July on a loan worth roughly $6 million. Designs for Living hopes to cover that debt by raising about $15 million from the liquidation sales it is holding at Klingman’s, 1001 28th St. SW, Israels Designs for Living, 2320 28th St. SE, and the John Widdicomb Trade Center at 601 Fifth St. NW. The liquidation is expected to take 30 to 60 days to complete. Fifth Third Bank is taking possession of the Klingman’s and Designs for Living stores.

As for the firm’s other holdings, such as the extensively renovated structures on the city’s West Side that serve as the company’s headquarters, Israels said they weren’t sure whether some would be affected by the banks’ actions and were working through that situation with the lenders. “There are certain ones we know there is no effect on and others we not certain yet,” he said.

“Our main focus right now is trying to take care of our existing customers and our overall staff. We have been looking at different options on how to take care of these people and that’s what is most important to us,” said Israels.

Israels Designs for Living started out as a small showroom in 1959 and grew into a worldwide interior design firm. Robert Israels took over the company in 1963 and purchased Klingman’s in 2008. He opened the store in September of that year in a renovated former Roger’s Department Store building. He told the Business Journal in 2008 that he had a strong interest in the products the Klingman’s Furniture Co. produced for 30 years before he bought the business and that he first became attracted to the company in 1976 as a young retailer. Robert Israels is undergoing treatment for cancer.

Gorman’s was founded by Ben Gorman in 1940 as a railroad freight company that sold damaged goods, including furniture, to local communities. Twenty-five years later, Gorman sold the business to Moray and his partners; Tom Lias, Jeff Roberts, and John Moray. Today, Gorman’s has showrooms in Southfield, Troy, Novi and Lakeside.

David Israels said his father, Robert, has known Moray for decades. In fact, when the Israels family bought their store at 28th Street and Breton Avenue 15 years ago, it had been a Gorman’s Furniture outlet. “We purchased it from the investment group that owned the property and we had a mutually respected relationship with Gorman’s for them to be able to wind down their business in Grand Rapids in an orderly businesslike fashion,” he said.

“As Bernie said to me when he called (last) Monday morning, what your dad did for me 15 years ago was truly a gentlemanly and class act and we want to have the same type of opportunity to work with you today. So this has all just come up since (last) Monday. It is something that they understand and with the right involvement with our family there could be a great opportunity here.”

Israels said he has heard nothing but good remarks from customers and others about how the family conducted its business and contributed to the city, since the word got out about the banks’ actions. “One of the things that has been so amazing has been the community’s support and their comments about their memories of things  that our family has done with them and how we’ve touched their lives; whether it be a purchase that a grandparent made or they made themselves or other things that we’ve done in the community. That has truly been amazing,” he said.

Moray said the alliance discussions were still in the infancy stage and he was talking directly with David and (operations manager) Jacob Israels. “More details will follow as things begin to fall in place,” said David Israels. “But we’re definitely putting together something that will allow the Israels family to remain a vital and viable presence in the marketplace.”

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