Wichita’s largest pawnbroker, A-OK, has filed for Chapter 11 bankruptcy because of embezzlement, said owner Bruce Harris.
In the bankruptcy filing last week, A-OK says that it has about $9.5 million in assets and $11 million in liabilities — $4 million in liabilities secured by collateral and $7 million unsecured.
The move comes a week after Simmons First National Bank filed to foreclose on Harris and six of his businesses for not repaying a $4 million loan.
On Friday, Harris said the operation will remain open and pawned items will remain available to be reclaimed. A-OK has four locations, plus a corporate office.
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“Their stuff is absolutely safe and will be there for as long as they need,” he said. “I got ahead of myself a little bit, but it’s an internal problem.
“I’m restructuring, and I’m looking for a new bank. I’ve got a great business.”
Harris said an employee embezzled about $1.5 million from the company, ending in March, which turned a tight financial situation into a bankruptcy.
“We redid two giant shopping centers at the same time this was going on, so, ‘Oops,’ ” he said. “That’s a lot of cash flow going out.
“It takes time to get back, but we’re getting there.”
According to the suit filed by Simmons, Harris hasn’t kept up with the agreed upon financial requirements: his total net worth fell below $3 million; the value of the companies’ accounts receivable and inventory fell below the value of the loan, and Harris failed to provide timely financial statements to the bank.
The bank is asking the court for possession of all business assets, inventory, accounts receivable, fixtures, even computer software, to pay off the debt.