A sudden downturn in revenues, combined with a significant amount of debt incurred from leases related to its commercial office space, were the key factors behind the decision by Global Authentication Inc. to file for bankruptcy protection, according to the the company’s CEO.
Todd Ault, who took over as CEO last month, said even though autograph submissions to the company have “dramatically improved,” Global’s overall revenues took a 50-percent drop in a two-month period.
“The bad economy really had a negative impact on our business,” Ault said. “With the capital structure that we had in place, bankruptcy was our best option.” He also clarified that the bankruptcy filing affects the holding companies that own Global, and not the grading firm itself. “Consumers submit their product to the operating company for the grading service. The operating company is not in bankruptcy.”
Ault took over as CEO of Global in December, replacing Bill Dully, who Ault hired last year to oversee the grading firm as part of his duties with Ault Glazer, the parent company of Global. Shortly after Dully being hired, Ault stepped away from Ault Glazer. Last week, Gary Gottlieb was named the new CEO of Ault Glazer.
“He’s really cleaned up the operations of the grading company, but he wanted to move on to a larger company,” Ault said of Dully’s time with the company. “He had only committed to help me for one year. We’re friends, and he was doing me a favor by coming here in the first place. He’ll remain with us as a strategic adviser for the time being. I’d love for him to stay on (as CEO), but he’s up for other positions that are much more of a higher profile than Global Authentication.”
While Ault is the CEO, Steve Sipe is managing the day-to-day operations at Global. Ault says the bankruptcy filing allows the company to move forward with some of its plans to diversify. “I’d like to make Global part of a larger sales and service division, including auctions, books and high-end collectibles,” he said. “We’ve authenticated some historic pieces that are not sports related, and I’d like to step up those efforts. We’re contemplating opening another office, perhaps in the Midwest. We’re going to spend a lot of money in online advertising.”
While consumers don’t always view a bankruptcy filing as a sign that a company is on solid ground, Ault says it’s important to remember that Chapter 11 is nothing more than a tool used by a number of businesses to restructure their finances.
“We’ll be a stronger company after this bankruptcy, and this will allow us to come up with a long-term solution to pay our creditors,” Ault said.