“Hell has no fury like a despised stationer.”

It was the opening salvo of an Instagram Publish last week from Lisa Krowinski, founder of Sapling Press, a typographic design and printing studio in Pittsburgh. Ms Krowinski was in shock after Paper Source, the stationery chain with 158 stores, abruptly filed for bankruptcy on March 2. His five-person company had fulfilled large chain orders in January and February, and owed more than $ 20,000 for items like Father’s Day cards and tea towels.

The post drew a slew of comments from other frustrated cardmakers – a niche industry dominated by female entrepreneurs – who were also concerned about whether they would get paid. Paper Source emailed the suppliers a day after filing for bankruptcy, saying they would be paid in full for goods supplied from March 2 and to file claims to collect the rest.

“As a community, we believe we have been operated in a way that no small business should have been, especially after a pandemic,” said Ms. Krowinski, 46, who sold products to Paper Source for nine years. “It hurts.”

Paper Source, founded in 1983, is the last national retailer to file a Chapter 11 application bankruptcy protection during the pandemic, a process that companies JC Penney To J Crew have used to keep their brands alive while getting out of store leases and reducing debt.

The difference with Paper Source is that vendors say the company placed large orders for cards and gifts in the lead-up to filing, even pushing for faster deliveries. Now it is not clear how much money the sellers will get back. Saleswomen are largely creative women who run small businesses on their own or with a handful of employees.

“Women have already been so injured in this pandemic disproportionately compared to men just in terms of the types of jobs we do and having families to take care of,” said Janie Velencia, owner of 30 years of the Card Bureau in Lorton, Va., who owes Paper Source $ 15,000. “They did this to a bunch of women-owned businesses during Women’s History Month and just before International Women’s Day.” (Paper Source currently sells products celebrating these events.)

Paper Source is now facing the exceptionally public fallout from its suppliers, who happen to be in the sharp and skilled communication business, as it aims to keep operating. The Chicago-based company placed its January and February orders “with the thought process as we avoid Chapter 11 and potentially an investor comes into the business,” said Winnie Park, Managing Director of Paper Source. , in an interview. . “Unfortunately, these options did not materialize.”

Ms Park said she was concerned about online “misinformation” about bankruptcy and that the company planned to create a webinar to help its more than 1,200 suppliers understand how to file claims. She said she hoped vendors, including around 250 card manufacturers, would receive “normal or near full payments” through special funding for “critical vendors” and a court ruling prioritizing vendors whose goods have been received within 20 days of deposit.

“Our intention was never to hurt women and women entrepreneurs,” said Ms. Park, 49. “We’ve been through a pandemic that’s been longer and deeper than any of us anticipated, and we have a path forward that we want to engage these women entrepreneurs. “

Yet three vendors shared emails from Paper Source in which the company offered them critical vendor fund payments that were between 10 and 30 percent of what they were owed. In return for the money, Paper Source said it needed confirmation that suppliers would continue to supply goods to the chain, according to the emails, which were shared on condition of anonymity as they were confidential.

Among the biggest sticking points with suppliers are January and February orders. They wonder if Paper Source knew she was making purchases that she couldn’t afford, at least not on time. Paper Source typically pays for goods 30 to 60 days after receipt. According to court documents, the company began preparing for a Chapter 11 filing in early February after failing to secure a capital injection or interest from 138 potential buyers last year.

Alex Gagné Glover, founder and CEO of Chez Gagné, a Los Angeles card and beverage merchant, said Paper Source placed significant new orders with his four-person company in December, January and February for cards printed in typography for birthdays. (“Doing this thing of life with you is pretty awesome”) and friends (“you are my soul mate”) and pushed to have them delivered by the end of February. She thought the orders represented a beacon of hope for post-pandemic sales. She said the chain now owed her over $ 20,000.

“It’s really fishy that they place so many orders with so many small businesses before filing for bankruptcy,” said Gagné Glover, 33.

Ms. Velencia said most of what he was owed was from commissions this year. Sapling Press said it received its biggest order in months from Paper Source in early February. Steel Petal Press, a stationery and gift shop in Chicago, said it was expecting five unpaid payments from Paper Source, including three orders placed before the bankruptcy that it was asked to hurry.

“There was no reason to rush for a $ 7,000 Father’s Day order – these cards weren’t on sale as of mid-February,” said Ms. Krowinski of Sapling Press.

Ms Park said the orders were unrelated to the company’s bankruptcy. Paper Source has been trying to revive its inventory for months, she said, not least because it had to stock around 27 new locations it acquired just before for the pandemic hit by the bankruptcy of Papyrus, its former rival. . “We have been trying to have our stock of greeting cards in a healthy position since last October when it was very clear that we were very low in stock,” she said.

But this decision amplified the confusion of the sellers. “The fact that January had arrived and the brands started getting these big orders, they were happy and excited to think it was great, things are on the rise again and it wasn’t.” said Katie Hunt, a business coach who works with the stationery. suppliers through his company, Proof to Product. “The optics are bad.”

Paper Source, which has been privately held for years, is a relatively small retailer but a giant among stationery makers, a user-friendly industry with regular trade shows and even ‘paper camps’, where aspiring card makers hang out. network and learn how to get their goods in. bookstores and other chains, like Nordstrom. Due to its size, Paper Source is able to make concessions such as longer payment terms. He even requested credits of up to $ 250 from vendors to help build new stores, according to emails reviewed by The New York Times.

Paper Source has around 1,700 employees, the vast majority of whom are paid by the hour, and had gross sales of $ 104 million last year, up from $ 153 million in 2019, according to court documents. .

Like many retailers, Paper Source’s sales plummeted last year as it grappled with closings, capacity restrictions and “the wave of canceled marriages,” according to the documents. He closed stores, cut jobs and cut senior management salaries. The company estimated that 30% of its former loyal shoppers had not visited a store or purchased from its website since the start of the pandemic.

Court documents show she has over $ 100 million in debt and leases that cost $ 36 million a year. The company, majority owned by Investcorp, has secured short-term financing as part of the case and is considering selling to lenders by the end of May. Paper Source declined to comment on specific costs associated with its debt.

Many vendors have said they understand Paper Source is being challenged by the pandemic. But while Paper Source may restructure, there is no guarantee of when or how much its suppliers will be paid.

“I don’t think anyone is mad at Paper Source for filing for bankruptcy,” said Kyle Durrie, owner of Power and Light Press in Silver City, NM, and who owes Paper Source about $ 8,000. “Where I think it really hits a lot of us, it’s just like we’re being exploited, and we have no rights or remedies because of our small size.”

While some vendors have said they will no longer work with Paper Source, Ms Park said she was optimistic the relationship would improve with more education.

“Bankruptcy is a clear path for the professionals who go out there and do it every day,” she said. “For a community like Paper Source that has never been there, or for our creators who have never been, it’s confusing.

Gillian friedman contributed reports.

Contact Sapna Maheshwari at [email protected]