Innovative Stone – Stonemark granite
NY pension fund stake at risk in Hauppauge company bankruptcy BY CARRIE MASON-DRAFFEN | carrie.mason-draffen@newsday.com
http://www.newsday.com/busines...apr29,0,979487.story 9:23 PM EDT, April 29, 2009
A Hauppauge company in which New York State's pension fund has invested at least $5 million has filed for bankruptcy, putting the state's stake at risk.
The Innovative Cos., which boasts many high-profile clients, specializes in countertops, vanities and floor and wall tiles made with natural stones. It was unable to renew a Citibank loan and filed for Chapter 11 protection, the company's bankruptcy attorney said. She didn't say how much financing the company was seeking.
The company, which was founded by Karen Pearce in 1981, employs about 300 people in several divisions, including Innovative Stone. Its clients have included The Home Depot, which it has supplied with granite countertops, Time Warner, Bloomingdale's and Harrah's, according to Innovation's Web site.
The state invested in the company via the in-state private equity investment program of the New York State Common Retirement Fund, which the comptroller manages. Since the program began in 2000, the state has invested $404 million in 127 companies and boasts a 30 percent rate of return over several years. It began investing in Innovation in 2004, when Alan Hevesi was state comptroller. He resigned in 2006 amid a controversy over his alleged use of state workers to chauffeur his sick wife.
Worried about your money? Stay on top of Wall Street and local LI business stories On Friday, Hevesi's successor, Thomas DiNapoli, appeared at a Stony Brook University forum to publicize the investment program. Materials handed out touting the company made no mention of the bankruptcy filing April 17 in U.S. Bankruptcy Court in Central Islip.
"We were unaware of it" at the time, spokesman Dennis Tompkins said Wednesday.
Innovative attorney Leslie Berkoff, of Moritt Hock Hamroff Horowitz in Garden City, said that Citibank is pushing for a liquidation, which could wipe out investors, who are unsecured creditors.
"If Citi goes ahead and liquidates it, you've got serious problems here," she said.
Citibank didn't return calls seeking comment.
The comptroller's spokesman said any investment carries risks but he believes the company will turn around.
"We are confident the company has a good plan to come back stronger than ever," Tompkins said.
Richard Schneider, managing director of Manhattan-based Easton Hunt Capital Partners, one of 17 equity firms that help to manage the state's private equity investments, also believes the company will come back.
"It's a great company," he said. "It's been around for 28 years. We have total support for management."
