The old Victory Rug building. (Photo by David Larter)
A local developer and a Northern Virginia rug cleaning company on Monday purchased the business interests and commercial real estate of a prominent bankrupt Richmond couple at auction.
The sale was one of the next steps in the bankruptcy of Allen Mead Ferguson and his wife, Mary Rutherfoord Mercer Ferguson, local socialites known for their ties to business and philanthropy.
Held at the Shockoe Bottom offices of law firm Hirschler Fleischer, the auction was looking to unload the remaining assets of George-Marshall Corp. and Mercer Rug Cleansing, two businesses the couple owned and used as collateral on loans for their personal finances.
The two companies were put into Chapter 11 shortly after the Fergusons declared personal bankruptcy in March.
Mercer Rug is an active oriental rug cleaning business with 15 employees in Scott’s Addition. George-Marshall is a real estate holding company that owns several commercial properties.
About three dozen people showed up for the auction, and bids were made through sealed bids and a live open auction.
In the end, local developer Guy Blundon, who runs CMB Development, paid $600,000 for the former Victory Rug Cleaning building on South Cherry Street in Oregon Hill.
The three-story, 17,000-square-foot building will be converted into apartments, Blundon said.
“It’s too early to talk specifics on the apartments, but they would not be student-type apartments,” Blundon said. “It will be a historic rehabilitation, and the apartments will be interesting and full of the character of the old building and Oregon Hill.”
Blundon was also involved in a $2 million deal in August to purchase a 1.8-acre parcel in Manchester that was owned by George-Marshall.
Dominion Realty Partners, the developer of the John Marshall Hotel, was in on that deal but is not involved in the Victory Rug project, Blundon said.
As for Mercer Rug and its employees, they will now be owned by Hadeed Carpet Cleaning, a similar but larger company based in Alexandria.
Hadeed paid $1.4 million for all the business assets, which includes the business’s 23,000-square-foot headquarters and a neighboring 6,200-square-foot building on West Moore Street in Scott’s Addition. Mercer Rug was bringing in about $800,000 a year in revenue.
Hadeed plans to keep the business alive in Richmond, according to David Spiro, an attorney with Hirschler Fleischer who represented George-Marshall and Mercer Rug.
“They plan to retain all current employees and grow the business in Central Virginia, benefiting the local economy,” Spiro said.
George-Marshall and Mercer Rug are family businesses that were once run by Mary Ferguson’s father, George Mercer. Mary Ferguson is now the president and sole stockholder of the companies.
The proceeds from the auctions will go to pay off the lien holders on the businesses.
EVB has a lien on the Mercer Rug business assets. Union First Market Bank has first lien on Victory Rug building.
Any money left over after the banks are paid off will be funneled into the Fergusons’ personal bankruptcy.
“Our mission was to sell the assets in a combination that would maximize the return the creditors,” said Spiro.
The auction was handled by Tranzon.
Bill Londrey, a senior executive vice president at Tranzon, said such assets typically sell separately at bankruptcy auctions. Finding one buyer for all the pieces of the business was a bonus.
“It was a better deal for all the creditors involved in the bankruptcy,” Londrey said.
Although interest was strong leading up to the auction, no one was sure whether a 70-year-old rug cleaner was an attractive company.
“The results are way better than anyone anticipated two or three months ago, particularly for the business assets,” Londrey said. “We didn’t know a month ago if anyone even wanted the business.”
The auction purchases are still subject to approval by the federal bankruptcy court. A hearing is set for Thursday, where approval is expected, Spiro said.
The old Victory Rug building. (Photo by David Larter)
A local developer and a Northern Virginia rug cleaning company on Monday purchased the business interests and commercial real estate of a prominent bankrupt Richmond couple at auction.
The sale was one of the next steps in the bankruptcy of Allen Mead Ferguson and his wife, Mary Rutherfoord Mercer Ferguson, local socialites known for their ties to business and philanthropy.
Held at the Shockoe Bottom offices of law firm Hirschler Fleischer, the auction was looking to unload the remaining assets of George-Marshall Corp. and Mercer Rug Cleansing, two businesses the couple owned and used as collateral on loans for their personal finances.
The two companies were put into Chapter 11 shortly after the Fergusons declared personal bankruptcy in March.
Mercer Rug is an active oriental rug cleaning business with 15 employees in Scott’s Addition. George-Marshall is a real estate holding company that owns several commercial properties.
About three dozen people showed up for the auction, and bids were made through sealed bids and a live open auction.
In the end, local developer Guy Blundon, who runs CMB Development, paid $600,000 for the former Victory Rug Cleaning building on South Cherry Street in Oregon Hill.
The three-story, 17,000-square-foot building will be converted into apartments, Blundon said.
“It’s too early to talk specifics on the apartments, but they would not be student-type apartments,” Blundon said. “It will be a historic rehabilitation, and the apartments will be interesting and full of the character of the old building and Oregon Hill.”
Blundon was also involved in a $2 million deal in August to purchase a 1.8-acre parcel in Manchester that was owned by George-Marshall.
Dominion Realty Partners, the developer of the John Marshall Hotel, was in on that deal but is not involved in the Victory Rug project, Blundon said.
As for Mercer Rug and its employees, they will now be owned by Hadeed Carpet Cleaning, a similar but larger company based in Alexandria.
Hadeed paid $1.4 million for all the business assets, which includes the business’s 23,000-square-foot headquarters and a neighboring 6,200-square-foot building on West Moore Street in Scott’s Addition. Mercer Rug was bringing in about $800,000 a year in revenue.
Hadeed plans to keep the business alive in Richmond, according to David Spiro, an attorney with Hirschler Fleischer who represented George-Marshall and Mercer Rug.
“They plan to retain all current employees and grow the business in Central Virginia, benefiting the local economy,” Spiro said.
George-Marshall and Mercer Rug are family businesses that were once run by Mary Ferguson’s father, George Mercer. Mary Ferguson is now the president and sole stockholder of the companies.
The proceeds from the auctions will go to pay off the lien holders on the businesses.
EVB has a lien on the Mercer Rug business assets. Union First Market Bank has first lien on Victory Rug building.
Any money left over after the banks are paid off will be funneled into the Fergusons’ personal bankruptcy.
“Our mission was to sell the assets in a combination that would maximize the return the creditors,” said Spiro.
The auction was handled by Tranzon.
Bill Londrey, a senior executive vice president at Tranzon, said such assets typically sell separately at bankruptcy auctions. Finding one buyer for all the pieces of the business was a bonus.
“It was a better deal for all the creditors involved in the bankruptcy,” Londrey said.
Although interest was strong leading up to the auction, no one was sure whether a 70-year-old rug cleaner was an attractive company.
“The results are way better than anyone anticipated two or three months ago, particularly for the business assets,” Londrey said. “We didn’t know a month ago if anyone even wanted the business.”
The auction purchases are still subject to approval by the federal bankruptcy court. A hearing is set for Thursday, where approval is expected, Spiro said.
This was the best possible outcome, allowing for the continuation of the small business in our community and recouping money for creditors. The sealed bid, followed by a live bid forum allowed unlimited opportunity for interested bidders to win the deal.
I agree Linda… another small business “surviving” is good. It would have been nice for Mercer to stay truly locally owned, but at least it is Virginia owned.
This is Joe, CEO of Hadeed Carpet. We appreciate all the Richmond support and are very much looking forward to providing your community with exceptional rug cleaning service by following the Mercer tradition.
We’ve also added repair & restoration services, wall-to-wall carpet cleaning, and tile & grout services for your convenience. Call us for a free estimate!