North America’s only significant fur auction house and fur processor is in a freefall towards bankruptcy.
Facing insolvency, a bank severing ties, and checks to their clients bouncing as of this week, NAFA sent a couple of desperate emails to its fur industry clients to assuage concerns that North American Fur Auctions is about to go under.
A summary of the known symptoms of collapse at NAFA:
1. A number of layoffs.
2. Trappers reporting their checks are bouncing.
3. Loss of their bank, who decided to cut ties with the fur industry.
Read four emails from CEO Douglas Lawson to the fur industry below – two from this week, and two from earlier in the year for good measure – tracking their decline towards bankruptcy.
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October 3rd, 2019
In my letter of October 1st, I neglected to deliver a clear message to the many who had prompt payments from our August sale returned NSF. Once again, I apologize. This point definitely requires more explanation and more importantly, information on the repayment plan.
As we approached the September 17 Prompt Date for our August 2019 Auction, we were finalizing the details to transition from our current banking syndicate (“Bank”), to another lender group. At that time, there was a clear expectation on our part that our Bank would honor all prompt payments as the vast majority of these funds had already been paid on September 17th via electronic means. However, 2 days later, the Bank, unexpectedly and without any warning, decided to reverse course and immediately reject any further such check payments by returning marked NSF.
It appears that the Bank took this action as a means to put pressure on both NAFA and the new financial lender to close this refinancing deal more quickly. In our view, this was an unwarranted and unnecessary action by the Bank, given that the new lender had, just that very day (September 19th), credit approved its deal with NAFA and was ready to proceed with putting this new financing in place.
As I stated in the October 1 letter, we have every reason to expect that the transition to the new lender will be finalized around the middle of this month. After this is completed, we will reissue checks for those that were returned NSF along with an additional sum designed to cover your NSF fees. If you have not yet deposited your check, please hold onto it and we will advise you when to cash it.
We expect that all outstanding payments will be cleared up by the end of October.
Again, I am immensely sorry for this delay in getting you your payment for the furs that you entrusted us with in good faith. I can only say that NAFA will honour our commitments to you and will work hard to regain your trust as your fur marketing company.
For your information, we have revised our selling schedule for 2020, which is outlined below.
Sincerely,
Doug Lawson
President & CEO
October 1st, 2019
On behalf of NAFA, including all of our collectors and agents who support you in your work to produce the largest and most diverse collection of wild fur in the world, I want to sincerely apologize for all of the drama that you have had to endure with us over the past few months.
We have faced almost insurmountable challenges as our banking partners of many years appear to have decided to get out of the fur business. Unfortunately, for NAFA and our customers, this came at a time when we needed them the most. However, through hard work and focussed dedication across the entire NAFA organization, we have been able to weather this assault on our business.
I am pleased to announce that, as of today, we have put the first important piece of new financing in place as part of our overall transition towards new financial partners, and gaining a more solid financial footing. With this new development, NAFA remains in a position to continue to be the strong, global, producer-owned auction house.
Over these many years, you have put your faith in us as your auction company to provide a valuable service to you as a marketing organization. While we are on the cusp of coming through this storm, there continues to be rough waters ahead. The entire industry is still facing an unprecedented market correction and no sector is immune, including the auction houses. However, it is our commitment to you that NAFA and its management team will continue to take every step necessary to address the new realities of the industry through the right-sizing of our business, without compromising our services to our loyal shippers.
I am not going to try to make bold and brash statements about the strength of our business or how the experience of these last few months has not impacted trust and confidence in NAFA. I will say however, that all of the actions taken by our bank were, in our view, unnecessary and unwarranted as NAFA was not in violation of any bank covenants. Still, we are where we are and there is no point in doing anything other than admitting the current reality of our situation.
All that we can promise you going forward is that everyone at NAFA is going to work diligently to regain your trust. In this regard, I want to reiterate our commitment to you, that we will out-work and out-perform the competition in every way possible in order to continue to earn your business.
We will be announcing more details of our plans for the 2019-2020 season in the coming days and weeks.
We look forward to going into our 350th year with you and, together, working towards better and brighter days for our trade.
Sincerely,
Doug Lawson
President & CEO
North American Fur Auctions
April 26th 2019
As you well know, the fur industry has been in the midst of an economic downturn for some time now that has significantly impacted all aspects of our trade. NAFA has obviously also not been immune to the business realities and hardships occurring all across our industry.
However, after nearly 350 years, we have also proven many times over and across many business cycles, that we can adapt and thrive in both good and difficult times.
NAFA has, in fact, achieved stronger business results than many of our competitors over the last few years. Nevertheless, the time had come to once again adapt our business infrastructure to fit with current industry conditions. We don’t think that the need to do this should surprise anyone.
Therefore, on Tuesday April 16th, NAFA made the difficult decision to eliminate some staff positions within the Company. These decisions were not made lightly and were made to strengthen our business and structure the Company for the best possibility of future success.
The departments in which NAFA chose to reduce its staff were in administrative and ranch mink functions. The decision to make these staff reductions was not done due to financial weakness. Rather, we made these decisions because we believe that in the long run, it will streamline our operations, reduce costs and improve our financial results.
Please rest assured that your needs will continue to be met and our service to you will not be affected. In fact, it is our intention to put even more resources and attention to the wild fur department in the coming months as well as to strengthen our global lead in wild fur marketing. We see a big opportunity in wild fur in the coming years and will make all efforts to development this market further.
If you have any questions or concerns please feel free to contact us at any time.
Sincerely,
Douglas Lawson
President & CEO
April 17, 2019
Dear Producer,
Today is a difficult day at NAFA as we have had to let go members of NAFA staff who were our close friends and colleagues. I am informing you of this as these staff members include some of our North American solicitors.
We are well aware that the entire fur industry has been under considerable adverse pressure for the last couple of years. Mink consignment volumes are currently falling dramatically and market prices for our goods remain at unprofitable levels across all facets of the trade.
NAFA has obviously not been immune to the business realities and hardships occurring all across our industry. Although we have done better than many of our competitors in recent times, it was time for us to take action in this regard.
My first obligation must be to help the Company navigate through these difficult economic times and in doing so, protect nearly 350 years of NAFA heritage. It also means ensuring the ongoing economic viability of the Company, our corporate mission and our ability to continue to service our customers for years to come. Finally, I am trying to set the Company up for what I believe is the best possibility of future success. This is the only way that I know to return our business to the path of growth and profitability while protecting the jobs/financial health of all remaining NAFA employees and stakeholders.
Your solicitor will reach out to you in the coming days. In the meantime, should you have any questions, please do not hesitate to contact us.
Thank you for your understanding.
Douglas Lawson
President & CEO
North American Fur Auctions