About two weeks back, I wrote about a story that Bob Tedeschi wrote for the New York Times that I felt badly mischaracterized the actions of the principals of Eziba, a web-based importer of art objects. Dick Sabot, one of the founders of the company – and a close friend of mine – shared the letter he wrote to the New York Times in reaction to Tedeschi’s piece. The Times didn’t choose to print it, so I’m reposting it below, both to create a permanent record of the letter on the web and to share Dick’s response with the folks who’ve expressed interest in this story.
Letters to the Editor
The New York Times
April 18, 2005
Re: “Questioning Eziba’s Decisions”
By Bob Tedeschi
Published April 18, 2005
To the Editor:
Contrary to the recent article by Bob Tedeschi, Eziba did not declare bankruptcy. Three large American firms forced Eziba into bankruptcy despite being informed that this would create serious problems for low-income overseas artisan creditors because the process takes as long as 18-24 months for the creditors to be paid. Had Eziba been left in the Assignment for the Benefit of Creditors, where it was placed by the Eziba Board, it is likely that the artisans would have been paid by now.
Eziba had only one secured creditor, a socially responsible bank. The board was advised that the bank could seize Eziba’s assets if we did not pay it. The assets could not then have been sold to Overstock, the proceeds of which sale ($500,000) are now going to the creditors. Had we paid other creditors first, those payments would have been clearly preferential and the court, we were told, would ask for those payments to be returned.
Where a socially responsible company like Eziba is different from other companies in financial trouble is that members of the team stay the course even after a bankruptcy filing. It is a tragedy that Eziba came so close but did not succeed. Overseas artisans that got caught in the process are being paid in full. Payments from former staff, investors and other friends of Eziba to those artisans have begun. We welcome Overstock’s commitment to join us in doing the right thing.
Richard H. Sabot
Co-Founder and Chairman of the Board of Eziba