Steve & Barry’s vendor might never get paid

For most students, Steve & Barry’s closing means they will no longer be able to buy discount IU attire on Kirkwood Avenue. But to alumnus Matt Kesten, it means he might never see a cent of the money owed to him.

“My outlook is just that we’re never going to get paid – at all,” Kesten said.
Kesten’s company, hoosierbeat.com, has yet to be paid for an order of T-shirts they sold to Steve & Barry’s in 2007.

In 2005, Kesten came up with the idea of “Sampsonite” T-shirts after Kelvin Sampson was hired as IU men’s basketball coach.

Kesten said Steve & Barry’s made two purchases from hoosierbeat.com. In February 2007, Steve & Barry’s first ordered about 400 “Sampsonite” T-shirts that they eventually paid 120 days later than expected, Kesten said. Steve & Barry’s then ordered about 2,700 “Sampsonite” T-shirts for about $13,000 in November 2007, Kesten said. He has yet to receive the money from the second purchase.

“We produced all the apparel and never got paid a dime for any of it,” Kesten said.
Steve & Barry’s filed Chapter 11 bankruptcy protection during the summer.

The company did not return six phone calls made to its corporate office.

Chapter 11 bankruptcy is mostly used to help a business reorganize, but a business can choose to liquidate if reorganization does not seem possible, said Joel Rubin, clinical associate professor of business law at the Kelley School of Business.

Within Chapter 11 bankruptcy, there are two types of claims: secured and unsecured. Secured claims deal with a kind of security such as a loan to a bank. An unsecured claim is anything unsecured such as a vendor. Secured claims must be paid off before unsecured claims will be paid.

“Since this guy is a vendor, he’d be an unsecure claim,” Rubin said.

Kesten said hoosierbeat.com filed paperwork to receive a portion of their money when they found out Steve & Barry’s filed for bankruptcy. Steve & Barry’s sent them a letter promising to pay them two cents on the dollar for the money they owed.

Tim Lemper, clinical associate professor of business law at the Kelley School of Business, said when a company files for bankruptcy, certain legal protections take place to protect a company from hiding or transferring money or assets to preferred people.

“In some cases, even if the company has promised to pay Matt a certain amount, that’s subject to the court’s approval,” Lemper said. “There could be an issue here with the court and the bankruptcy order as to why the money hasn’t been paid.”

Rubin said Steve & Barry’s has not broken any laws and situations like this happen all the time.

“If you can’t pay your claims, you can’t pay your claims. That’s not a crime,” Rubin said. “It’s just bad business, and that’s the idea of bankruptcy.”

Kesten said he believes his company will never get paid. He said he believes the management staff at Steve & Barry’s in Bloomington were good people.

“It’s the corporate heads who concocted a ridiculous scheme,” Kesten said.