Towers Broke

The American parent of Towers went through many, many rough times. Excerpts from a 1963 lawsuit, brought primarily by landlords owed rent, is included below.

The central entity in this case, although not a party litigant, is Towers Marts International Incorporated.

 

Towers had leased some 18 premises from various landlords in a number of States and established shopping centers or discount stores thereon. Towers then rented portions of the premises to various so-called "concessionaires", who conducted their respective specialty shops for the sale of separate types of merchandise in the Towers stores and under the ostensible management and operation of Towers itself.

 

As the controller in each retail store, Towers daily received the proceeds of the sales made by the concessionaires in that store.

 

Then, acting as the overall owner of all the businesses, Towers centrally received all of the proceeds and all of the sales of all the concessionaires in all the stores. Towers would periodically pay the rent due for each store under its lease with the landlord, and, after deducting from the proceeds of the sales the agreed-upon percentage thereof to be retained by Towers, would remit the net balance to the appropriate concessionaire.

In January of 1963, Towers found itself in serious financial difficulties.

 

The concessionaires were not receiving their shares of the sales and the landlords were not receiving their rents. The concessionaires reacted immediately. On February 4, a group of five trustees, representing the concessionaires, entered into a reason written agreement in New York with Towers and his 18 subsidiary operating centers, whereby the trustees assume control of the cash receipts of each center or store, thereby helping to ensure that each concessionaire would receive his proper share of the cash register totals. In pursuance of the agreement, an account was set up in a New York bank (under the name of the Marts Concessionaires' Trustee Account) and Towers was to deposit each day's receipts from each of its stores in this account and each week the trustees would pay Towers the net rent or commissions due from the concessionaires.

The next week, February 12, a general meeting of creditors was held in New York at which landlords, concessionaires and Towers attended -- in some cases with the principals, representatives and attorneys as well. In an effort to fend off bankruptcy Towers asked for time and capital. The creditors were dissatisfied with the Towers' management and expressed lack of confidence therein. Several sessions were held. The plaintiffs allege that, at such meetings, a landlords' committee arranged with the defendants to pay a "new" rent. At first the rent payable was was to be 4% of sales; later, $1 a square foot of occupied space. The intent was to treat all the landlord's on an equal basis. None of this was in a writing signed by the concessionaires or their trustees or the defendants or any of them.

 

Subsequently, allegedly confirmatory letters were written by the landlords committee's secretary to the concessionaire's trustees. The general thought was that some written agreement would be executed shortly by all the necessary parties.

Towers could not and did not pay any rents after the February meetings and it has since been adjudicated bankrupt. Some checks were paid to the landlord from the concessionaires' trustee account during February and March, 1963, but then such payments ceased. (It seems impossible, under the proof presented, to discover precisely on what basis these checks were issued.)