But even if the tactics of desperation could have kept CitiPostal alive a while longer, no one was minding the store. "Over the months I changed from a CEO to a fund-raiser; I felt like I was in the United Jewish Appeal and Catholic Charities," Brodsky recalls. "I didn't pay attention to my business. Sales started to slide, and it became impossible to raise the next $2 million." A persuasive salesman when he was rolling in the old days, he used to make 15 calls a week. Last summer he barely had time for 2 or 3. And in the past when he wasn't selling, he'd pore through check ledgers for hints of waste and inefficiency, cinching a taut belt even tighter. "I'm not doing the job I'm getting paid to do," he regretted. "I'm doing something I have to do, and I don't like it."
Before he submitted to one himself, Brodsky had assumed that a reorganization under Chapter 11 wasn't feasible in a service business like his. "All those little vendors wouldn't go along," he reasoned. "Imagine my calling up a town in Wyoming where I owe some cab company $200, and telling him he won't get his money on the old bill, but if he'll just take this new one, he'll get paid under a debtor-in-possession certificate? The guy's going to hang up on me."
He had to acknowledge that something along those lines was needed when, after CitiPostal had collected thousands of documents for a customer, its Denver agent threatened to make delivery by scattering them in the Colorado River unless Brodsky paid the $35,000 he owed. Brodsky couldn't. On the home front, the estranged bank continued to pursue his cosigning spouse by mail: you owe $2.6 million and we demand payment today, one correspondence importuned. Brodsky phoned back and said, "What are you doing sending letters to my wife? I have 15 attorneys, send it to one of them!" "Hey, if we wanted to be real nasty about it," the worker-out said, "we would have sent her a lawsuit." "And if I wanted to be real nasty," Brodsky retorted, "I'd walk out of here tomorrow and you'd get nothing." With that, he threatened to sue them for lender liability.
"If I hadn't consolidated the businesses," he berates himself, "I could have thrown only Sky into Chapter 11. Instead, I pledged the credit of one company for another company. I should have let one company stand or fall on its own. Once I did it, it was too late to change. Essentially I made only one mistake -- a bad acquisition," Brodsky sums up the fall. "It was an absolute, horrendous mistake from day one. But I learned something: you can't possibly borrow your way out of debt."
Salvaging what little business value remained, he sold off two more operating parts to the two airlines pending court approval, and filed for bankruptcy later the same day. By then, CitiPostal's unsecured debt was close to $20 million. "There's no way to stop the slide," Brodsky explains. "Every time you go in to make a sale, they ask to see your financials. Competitors know you have problems, and they use them as a selling tool against you. And morale is bad. We had wage freezes and cutbacks. One thing leads to another that leads to something even worse." Indeed, CitiPostal couldn't even get out its June 30 year-end financials: the company was past due on $110,000 to its now-former auditors, who thus became an anxious creditor like everyone else.
Under the indulgence of the bankruptcy court, Brodsky has ended up running a local delivery service shrunk to half the size of his old Perfect Courier. "It's like starting all over again," he says. "In some respects it's easier, in that I'm already doing around $7 million or $8 million of business, have no debt, and have a giant net operating loss going forward. The negative thing is I have no credit. Of course, I had no credit when I began, but at least I could plead 'Hey, I just started, give me a break.' " Previously angry vendors do sympathize -- though not so profoundly as to advance him buying power. When Brodsky informed suppliers that he had filed for Chapter 11, most rooted for him: "That's too bad, is there anything we can do for you?" "Yeah," Brodsky would suggest, "I need credit going forward." "Well, er, is there anything else?"
Brodsky arrives at work just as early as he did when he started Perfect Courier. He stays just as late, and gets home to dinner maybe once a week just as he used to. Only he's 10 years older and closer to his family, and now the hours are given grudgingly. Toward what end?
He owns far less of the company -- barely 30% -- and likely will own even less than that if the court dishes out equity to creditors. "I'm not here for a paycheck," philosophizes Brodsky, who, among other concessions, has accepted a slash both in salary and the size of his company car. "I started this place myself and have strong emotional ties to it. I would not like to go out a loser." Even if eventually he does, the lecture circuit likely will be the richer for it. "Bankruptcy itself is creative financing," the maestro has come to conclude. "If I weren't so involved, it would be a very interesting experience."
