Ha-Lo Industries, Chicago, yesterday said it filed Chapter 11 to place its core U.S. promotional products business under bankruptcy protection.
A corporate release said the move was precipitated by “several non-operating issues” such as the fated acquisition of Starbelly.com and the lease arrangement on its headquarters.
Ha-Lo acquired Starbelly.com in January 2000 in a deal worth a whopping $240 million, hoping that the latter’s technology would give the company the same leading status online it enjoyed in the bricks-and-mortar world. Starbelly now exists solely on Ha-Lo ledger sheets: In the first quarter of 2001, Ha-Lo incurred more than $15 million in expenses related to goodwill amortization and employee payoffs related to Starbelly.
To help keep the company afloat during bankruptcy proceedings, Halo secured a $30 million “debtor-in-possession” loan from existing lenders LaSalle Bank and Comerica.
The bankruptcy filing does not include Halo’s other businesses: promotion agency Upshot, Halo Sports, Premier Promotions, or the European and Canadian promotional products units.
The news refueled speculation that Chicago-based Upshot would soon be sold. The “Chicago Tribune” reported last Friday that former Coca-Cola marketing czar (and July PROMO cover subject) Sergio Zyman may be interested in acquiring the shop.
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