Century Window Fashion owner prepares to shut down business

By Lynn R. Parks

On Monday, Louis Chan, owner of Century Window Fashion in the Seaford Industrial Park, said that by Friday, he expects his business to be closed.

Already, he said, his dozen employees had been told to work only a half day Monday and not to show up on Tuesday. He expects to declare bankruptcy; the bank, he added, will probably foreclose on his building, the speculative building that was built in 1999 through a partnership with the city and state and that sat empty until Chan bought it last year.

The reason for his financial difficulties, he said, is the failure of the Small Business Administration to follow through on a promise to back the business. The Wilmington Certified Development Company (CDC) that the SBA uses to process loans has so far refused to finalize the original commitment from the SBA to assume 50 percent of the $3 million bank loan Chan used to buy the building and to complete its interior.

"The SBA is supposed to help small businesses," Chan said. "But nobody wants the responsibility of finalizing this loan. I'm baffled by the whole thing."

Jayne Armstrong, director of the SBA Delaware district office, based in Wilmington, refused to comment directly on Chan's situation, citing the federal government's privacy policy. But she defended the actions of her office, saying that it is dedicated to helping small businesses succeed as well as to its role as a steward of taxpayers' dollars.

"I am familiar with this application and I am certain that the Small Business Administration has followed established procedures and acted in accordance with the established policy guidelines," she said.

"Throughout the process, the [SBA] provided ongoing and valuable advice to the borrower and the [SBA] is satisfied that this loan application has been handled consistently within the guidelines and requirements of [its] 504 loan program," she added.

Chan, 44, is a native of Hong Kong and came to the United States about 30 years ago. Century Window Fashion, which he started in Maspeth, N.Y., in Queens, 15 years ago, makes custom window blinds.

He decided to move the Queens operation to Delaware, he said, because labor costs here are lower and because "the people are nicer." He entered into a sales contract with the city of Seaford in February 2006; after the city extended the sales contract several times because of delays in loan paperwork, Chan and the city settled in early 2008. He had loans from WSFS and Discover Bank totaling $3 million and a commitment from SBA to assume 50 percent of the loans once the building renovations were completed.

The company moved to Seaford in September of last year. In August of last year, the CDC handling Chan's loan asked him for a business plan.

After he sent that, the agency told him that it wanted to monitor Century's progress for three months before finalizing the loan. In an e-mail dated October 30, William Abernathy, director of the CDC, asked for evidence that the sales "are increasing to higher historical levels" and that "operational expenses are declining as a percentage of revenue as a result of the move to Seaford."

Abernathy also suggested that Chan lease part of the industrial park building to generate additional revenue. "If the months of November and December could provide some positive commentary on the direction of the company, I would be pleased to request funding by the SBA," he wrote.

But those months did not go well. "I am not a new company  I've been in business for 15 years," Chan said. Even so, he had brand new employees in Seaford who needed training and was facing a bad economy, he said. And November and December are not prime times for buying household furnishings, he added.

Now, Chan said, the CDC wants the Century tax return for 2009. That return has not been filed yet and he doesn't have the $20,000 that his accountant would charge to complete the forms, he said.

Chan said that he can't understand why, if it needs assurance that Century will succeed, the SBA can't look at records from the past 15 years of his business. "We have been successful," he said, so successful that in New York, Signature Bank gave Century a $500,000 line of credit. That line of credit was canceled and the $420,000 debt called in when Chan moved his business to Delaware, he said, only exacerbating his financial woes.

"The bank said that it had no interest in a company in Delaware," he said. Adding to his financial difficulties even more: escrow accounts with WSFS and Discover Bank totaling $250,000 that the banks set up in case renovations to the Seaford building ran over cost and that they won't release until the SBA loan is finalized.

"I can't get a line of credit and my money is in escrow," Chan said. He has been paying employees and vendors from money coming in from customers. "I have been running on accounts receivable and that is coming to an end this week," he said.

Chan, who put up his business inventory and accounts receivable as well as his Long Island home as collateral for the loans he needed to move to Seaford, expects to lose all of that.

He still owns a company in China that employs about 150 people, he said. That company will not be affected by this bankruptcy. He said that he is extremely disappointed with the way things have worked out. But he speaks very calmly and even, on occasion, manages a laugh. "What else are you going to do?" he said. "Get angry and go out and hit someone? You don't help anything by doing that."

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