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Alert Staffing Files for Bankruptcy Protection

Services: Dispute with Swiss partner Adecco over financing terms leads to Culver City firm's cash crunch.

July 19, 2002|KAREN ROBINSON-JACOBS | TIMES STAFF WRITER

Alert Staffing, one of the largest African American owned businesses in California, has filed for Chapter 11 bankruptcy protection as part of a legal dispute with Adecco, the world's largest employment agency.

The filing was made last week in U.S. Bankruptcy Court in Los Angeles after unsuccessful attempts by Alert to replace Adecco as a 49% partner in the Culver City employment-services company, said Victoria Lowe, who founded Alert in 1995 in her living room.

Alert experienced significant growth, pulling in more than $200 million in revenue in 2000 from staffing operations in more than a dozen states.

Much of that growth, Lowe said, was funded with at least $6 million in financing from Adecco--a Switzerland-based behemoth with $16.4 billion in annual sales that has been aggressively acquiring smaller regional chains in the U.S. and abroad. Adecco has more than 6,000 offices in 60 countries.

Spokesmen for Adecco could not be reached for comment.

The funding, and the form and timing of its repayment, is at the heart of Alert's dispute with Adecco, according to Lowe, who said the two firms formed a partnership in 1997 to help the smaller company expand.

Lowe said she and Adecco disagree over the terms of the loan, which she believes is not due for repayment until next year. Adecco foreclosed on the loan last fall and sent letters to Alert customers instructing them to pay Adecco.

Many customers were confused and withheld payment altogether, said Lowe, "which put us into an immediate cash-flow crunch."

The Bankruptcy Court cleared customers to continue paying Alert, said Lowe, who added that no layoffs are planned. Alert listed assets of $10.1 million and debts of $20.6 million in the bankruptcy filing.

Alert has lost business as a result of the dispute, according to its founder.

With both the economy and Alert's partnership heading south last year, 2001 sales fell to about $102 million, with no profit, Lowe said.

"There have been better times, but we'll keep doing what we do well," said Lowe, who Thursday was named minority business woman of the year by the Department of Defense. "And we'll just see where God takes us."

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