Who Gets Hurt When Paper Source Claims Bankruptcy?

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Mar 10

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I’m sure you all heard the news last week that Paper Source filed for Chapter 11 bankruptcy, is not reopening 11 of its stores that were closed last year, and has put itself up for sale. Now, as the owner of an independent paper store, you might think I would be dancing in the streets. Well, I’m not. Why? Because they left more than 200 small makers in our paper industry, most of whom are women, left with unpaid invoices worth multiple thousands of dollars each and the fear that they won’t get paid.Before Paper Source announced their bankruptcy, they reached out to these small independent businesses to ask them to move up their ship dates and rush orders to their warehouses. These folks scrambled because, in many cases, it was a huge order that would help make up for the losses they had last year. It would help them make their payroll and pay their rent. Here’s the real rub - Paper Source had agreements with these makers that the goods would be shipped and then they had 60 days to pay the invoices. This is not at all uncommon. It’s a way to get the goods in, sell them, and make a profit so you can pay the vendors back and order more product. What is so appalling here is that Paper Source likely knew they were going to claim bankruptcy and placed the orders knowing there was a possibility that these folks wouldn’t get paid. That sucks.Now I get it. It’s business and in business, you pay your money and take your chances. But you do it with full faith that your partner is going to come through for you. That your partner will have your back and won’t let you down. If the Paper Source sale goes through, then these folks will get paid. However, it depends on when the orders were received relative to the bankruptcy timeline. (Read this article for more details.) Some invoices will be paid in full, but some will be paid pennies on the dollar. Again, that sucks.

Photo credit: @saplingpress

The reason I bring all this up is to remind you how important it is to shop local. You shouldn’t feel sorry for Paper Source. They started out just like me - a small woman-owned retailer - but have since become part of a large private equity firm based overseas, called Investcorp. They care about making money for their investors, where we care about our community. About you.It’s clear that you all wouldn’t be reading this if you didn’t already support your local small businesses! This is definitely a ‘preaching to the choir’ moment. But it never hurts to highlight the difference between Penny Post and Paper Source. Between my two stores and the many others in Alexandria, you can find most of the 200+ makers that were dealt a dirty deal. So, I implore you to look to see if someone in Alexandria already carries the thing you want before shopping at a big box store. It’s not just your local retailer that benefits but small makers across the country and our community do too.It’s for this reason that we are so excited to bring you the first-ever Powered by Women tour of woman-owned businesses in Alexandria. It’s the perfect opportunity to shift a little more of your support away from national chains and back to our community. Please spread the word, spend your money, and participate in all the lives on Instagram. You will be helping so many if you do. Thank you!!