The letter was from the law firm of Shulman, Hodges & Bastian, LLP, Irvine, California, and was sent to creditors of specialty retailer Anaheim Patio & Fireside, Inc.

__________________________________________________
April 18, 2014

Re: Anaheim Patio & Fireside, Inc.

This letter constitutes an offer to compromise claims of loss or damage and to negotiate a resolution of such claims and is made for that sole purpose such that it shall not be admissible as evidence in any action or proceeding, as set forth in Federal Rule of Evidence 408.

Dear . . .

This letter is to provide you with an update on the status of Anaheim Patio & Fireside, Inc. (“Company”). As previously stated in the March 3, 2014 letter to you, the Company has been negatively impacted by the down turn in the economy in general and suffered tough financial issues with some of its locations. As a consequence, the Company has fallen behind on payments to taxing authorities, landlords and vendors/suppliers.

As previously stated, the Company has consolidated its operations to one location. Specifically, the Irvine and Brea locations have been closed and all inventory and assets moved to the Huntington Beach store.

The Company has taken a hard look at its finances and possible work-out plan business model and sadly has determined that it must pursue a liquidation strategy to maximize the recovery for all creditors. Specifically, in order to maximize the recovery for all creditors, the Company has determined it must over the next sixty days conduct a liquidation sale of the Company’s assets. The funds generated from this process will be used to pay creditors in their order of priority that creditors would normally see in a bankruptcy proceeding.

The Company has engaged the services of CMA to assist in its liquidation. CMA is a long established and well-respected third party who oversees liquidation sales of this type and often acts as a fiduciary for creditors. CMA’s analysis of value and proposed liquidation strategy is attached for your review. The sale process is set to begin this coming weekend. The funds generated from the sale of assets will be used to pay creditors in their order of priority utilizing the framework set forth in the Bankruptcy Code Section 507.

_____________________________________________________

The letter goes on to request that creditors refrain from collection activity for at least the next 60 days while the Company pursues the liquidation of assets.

Major Fourth and Fifth level creditors include the following:

State Board of Equalization	$66,818
Irvine Company Retail Properties	$60,049
Warner Center, L.P. c/o Pacific West Asset Management Corp.	$53,190
Brown Jordan Company	$34,453
Design Specialties	$38,930
Minson Corporation	$82,201
Northcape Chicago Wicker	$66,774
RH Peterson Co.	$170,593
Summer Classics	$68,775
Tropitone Furniture	$86,704

The words in the document are brief and devoid of emotion, they don’t hint at the years of hard work and smart decisions required to build a solid business of three successful stores in the high-priced real estate world of southern California.

The words don’t hint at the pain and emotions that undoubtedly reside behind every single letter of that document.

Anaheim Patio & Fireside isn’t the only casualty of the downturn, but it is one of the most well-known and admired retail businesses.