Friday, December 11, 2009
From Hot Firm to closed - but how?
In August, Cubellis was #13 on The Zweig Letter Hot Firm List. A little more than three months later, the 175-person Boston-based architecture and engineering firm was closing its doors, largely because Sovereign Bank froze its line of credit, according to President and CEO Lenord Cubellis.
So, do you expect to see more of this in 2010 - firms unable to stay open because banks are getting less lenient with letting them slide? Our founder, Mark Zweig, says that wouldn't have happened in the recent past but speculates it will happen more in the future. Do you agree? Have you seen this happen first-hand? Are you hoping your firm won't follow in Cubellis' footsteps? Do you learn anything from their misfortune?
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It's really unfortunate to see such a great entrepreneurial firm get shut down by their bank. It's very rare for a bank to do this to a "cash flow" business such as Cubellis.
ReplyDeleteThe real problems are going to occur when all of the firms whose office buildings are on five-year notes get their loans called due to a lack of equity. This is going to then screw up their AR financing as well. Not a good time to be in debt....
Mark Z.