Collectors Universe (read PSA)

[perezfan]

I believe he is simply stating that Joe Orlando was paid over one million dollars ($1,040,307) as the CEO of Collectors Universe. And that their PPP Loan amount was $4,204,300.

That's how I am reading it, anyway.

[MULLINS5]

Originally Posted by perezfan

I believe he is simply stating that Joe Orlando was paid over one million dollars ($1,040,307) as the CEO of Collectors Universe. And that their PPP Loan amount was $4,204,300.

That's how I am reading it, anyway.

Most of that (probably over $3 million) will end up being a bailout grant that does not have to be paid back. Doubtful the funds were really needed - just a low interest cash grab loan IMO (anything left over after the first 8 weeks from receiving funds rolls into a 1% loan I believe) and Joe Orlando himself will likely get a free $100k from it. The PPP was supposed to be for small business that need the funds to keep people on payroll and help with some operational expenses. How's CU stock been throughout the pandemic?

[perezfan]

Originally Posted by MULLINS5

Most of that (probably over $3 million) will end up being a bailout grant that does not have to be paid back. Doubtful the funds were really needed - just a low interest cash grab loan IMO (anything left over after the first 8 weeks from receiving funds rolls into a 1% loan I believe) and Joe Orlando himself will likely get a free $100k from it. The PPP was supposed to be for small business that need the funds to keep people on payroll and help with some operational expenses. How's CU stock been throughout the pandemic?

It dropped significantly (was under $15 for a brief time) but has rebounded a bit, along with the overall market (currently standing at $19.40).

[cardsnstuff]

Originally Posted by MULLINS5

Most of that (probably over $3 million) will end up being a bailout grant that does not have to be paid back. Doubtful the funds were really needed - just a low interest cash grab loan IMO (anything left over after the first 8 weeks from receiving funds rolls into a 1% loan I believe) and Joe Orlando himself will likely get a free $100k from it. The PPP was supposed to be for small business that need the funds to keep people on payroll and help with some operational expenses. How's CU stock been throughout the pandemic?

Yet, my landscape business, which is barely staying afloat, and haven't laid anyone off {many of my customers are home with more time than money at the moment} couldn't get a dime, keep in mind, I applied the first few days of the Eidl {and had an app in before site crashed} and first day the PPP program were open.

[mantlefan]

The Payroll Protection Program (designed to provide forgivable loans to SMALL Businesses) was gutted by massive payouts to HUGE Fortune 500 companies. Unfortunately that was perfectly legal although it was contrary to the spirit of the law. The bigger banks like Chase made sure their biggest customers got millions while they ignored businesses like mine.

USA Today:

"Some big banks have been accused in lawsuits of giving priority to requests for larger loans that carry heftier fees and come from bigger small businesses that have deeper relationships with the bank and are more likely to purchase other products and services."

The bad press that was generated has prompted some companies like Shake Shack a($10 million) and Ruths Chris ($20 million) to return the funds.

USA Today:

"After numerous reports that Fortune 500 companies and other publicly traded firms were able to access the Paycheck Protection Program, the Treasury Department and Small Business Administration on Thursday issued guidance designed to prevent what critics call favored treatment for well-heeled corporations.:

This week's program states that a company should be prepared to demonstrate to SBA, upon request, the basis for its certification...namely that without the funds their company will be in serious financial difficulty.

USA Today:

"It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith."

Hopefully the second round of PPP will accomplish what the first one failed to do.

Stay tuned....

[BruceinGa]

Yes, the radio news here said that banks brokered the deals for large companies once they discovered the loop hole allowing this. It didn't take long for that money to be gobbled up, leaving none for the small businesses.

[Zact]

The rules of the PPP CAres act explicitly state that the employee salary and benefits are capped at a value of $100k per annum. So a highly compensated employee can only receive a maximum of $8,333.00 compensation per month for the 8 week grant period, and health insurance cost and 401k employer match goes against it.
I don’t have an opinion with regards to whether CU should access the funds as a publicly traded company. The business also had to attest that the grant funds are necessary.

[Exhibitman]

They wrote a convoluted law to do what could have been accomplished much more simply by directly paying 75% of payroll to employees for qualified small businesses for two months and covering up to 25% of payroll in overhead costs directly paid to the businesses. But if they'd done that the banks wouldn't have been able to rake off 5% in admin fees and it would have been perceived as a direct transfer payments to people (something they only do with tax cuts), not as a small business loan, so we get this bizarre 'take it, spend it, apply to get it forgiven' mechanism instead.

My take on the PPP is that the Federal government is making employers into unemployment insurers: It doesn't matter if the same employees are hired or if they even show up, so long as the level of employment (head count and 75% of payroll) is maintained. According to the SBA’s Interim Final Rule:

“...the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgiveable [sic] purposes described below and employee and compensation levels are maintained.” [emphasis added]

They don’t even care if you are open or have any trade to speak of, they just want you shoveling the money out the door to employees.

I also think there is a really shitty bit of bureaucratic interpretation going on here. The initial information stated that you could use all of the money for fixed operating expenses at your discretion, including payroll if you actually need it, but the SBA’s Interim Final Rules modified that:

“While the Act provides that PPP loan proceeds may be used for the purposes listed above and for other allowable uses described in section 7(a) of the Small Business Act (15 U.S.C. 636(a)) ... the Administrator... has determined that 75 percent is an appropriate percentage ... This limitation on use of the loan funds will help to ensure that the finite appropriations available for these loans are directed toward payroll protection...”

The reason that interpretation sucks giant elephant ass so badly is that if you are a restaurant, for example, the payroll is the only thing you can control. If you are closed, you still pay your rent and pass-through expenses, interest, etc. That's what small businesses needed help with, not being unemployment insurers. And the spend and hope it gets forgiven? A hell of a risk to take. One of my clients pointed that out to me. I expect that there will be litigation over this eventually--regulators are not allowed to rewrite laws and the SBA explanation can be construed as an admission that the regulators understood the law but decided not to follow it as written.

Honestly, there are so many inconsistencies and holes in this that I don’t think anyone has any definitive answers. For example, it appears that you could take the loan, hire no one, bank the proceeds, pay the fixed overhead (rent and utilities and so on) with it, and then apply for forgiveness of what you actually spent up to the 25% of the loan cap. When the bank then decides what part of the loan is forgiven, you could pay off the balance immediately with the 1% interest accrued to that point and walk away with a few months of free rent and utilities. It also creates a perverse incentive: since you have to shovel the money out the door at no real benefit to your business if you are actually shuttered and with the risk that you might even owe it if the loan isn't forgiven for some reason, your better choice may be to hire no one: your ex-employees can stay on unemployment and you don't risk owing a debt. Or you could hire your family and friends for no-show jobs to fill out the payroll for eight weeks then get it forgiven. Meet my new executive VP of strategic management:



It is a stupid scheme…Sure hope I get my money

[MULLINS5]

Originally Posted by Zact

The rules of the PPP CAres act explicitly state that the employee salary and benefits are capped at a value of $100k per annum. So a highly compensated employee can only receive a maximum of $8,333.00 compensation per month for the 8 week grant period, and health insurance cost and 401k employer match goes against it.

So Joe Orlando, and others who make $100k/ year at Collector's Universe, will receive a FREE $16,666 + benefits. Even if it is that, vs $100k, that's money taken right of the hands of small business owners who are struggling to pay employees, rent, and utilities during this pandemic. Most small businesses are only asking for $15 to $30,000 to help keep them afloat.

Honestly, this is shameful of Collector's Universe who CLEARLY did not NEED the $4.4 MILLION they received (about $3.4 MILLION GRANT). I know small businesses who can't receive as a whole only what the executives at Collector's Universe are getting, and a couple in my area have to operate at limited to no hours because of it.

[slidekellyslide]

Originally Posted by cardsnstuff

Yet, my landscape business, which is barely staying afloat, and haven't laid anyone off {many of my customers are home with more time than money at the moment} couldn't get a dime, keep in mind, I applied the first few days of the Eidl {and had an app in before site crashed} and first day the PPP program were open.

Same here, I own a vintage toy store and an ice cream shop. Neither one was able to secure the loan because I just never heard back before the money ran out and I put my applications in very early. These publicly traded companies that went after this money as if it was a cash grab are shameless.

[ronniehatesjazz]

Anyone know the details of the chains that took it... was it some how going to franchisees? That could potentially make sense... or maybe the chains are slashing fees and royalties from the franchisees and using the funds to make up for it?

[Stampsfan]

Originally Posted by slidekellyslide

Same here, I own a vintage toy store and an ice cream shop. Neither one was able to secure the loan because I just never heard back before the money ran out and I put my applications in very early. These publicly traded companies that went after this money as if it was a cash grab are shameless.

+1000
Your business sounds like the “poster boy” for the type of business that this program should be helping.
I wish you and all Small businesses like yours good luck and a speedy return to something close to normal.

[slidekellyslide]

Originally Posted by Stampsfan

+1000
Your business sounds like the “poster boy” for the type of business that this program should be helping.
I wish you and all Small businesses like yours good luck and a speedy return to something close to normal.

Thank you, Bob.

[Rich Klein]

Originally Posted by perezfan

I believe he is simply stating that Joe Orlando was paid over one million dollars ($1,040,307) as the CEO of Collectors Universe. And that their PPP Loan amount was $4,204,300.

That's how I am reading it, anyway.

Correct -- just stating facts, and nothing more than that. It's a matter worth noting and discussing but I just wanted to post the facts and not stating an opinion on my part.

Rich

[Rich Klein]

For the 2nd Round -- possibly because of the backlash both public companies and places of higher education with huge endowments (Harvard the best known example) -- there will probably be less public companies going after this money and more places like your neighborhood LCS going after this money:

https://www.cnbc.com/2020/04/23/us-i...get-funds.html

Regards
Rich

[Bamacollection]

Good investment or stay away???

[samosa4u]

“Borrowers still must certify in good faith that their PPP loan request is necessary,” the SBA said.

Despite Joe Orlando's salary, we don't really know what kind of financial state CU is currently in. First, let's look at the SlabGate scandal. There are all these lawyers involved, lawsuits, returns, police, etc. And just when you thought things were bad, then boom, COVID-19 came knocking. PSA had to close their doors for about a month. According to a recent update posted on the 21st of April, PSA is slowly starting to reopen their California facility and have brought in a few employees, but they are still far away from being back at full capacity.

[drcy]

My girlfriend's company-- that she works for-- got $$, and the condition was they can't fire anyone. If they fire someone, they have to return the money.

[Bugsy]

Originally Posted by samosa4u

“Borrowers still must certify in good faith that their PPP loan request is necessary,” the SBA said.

This is from a new guidance posted today. It will be interesting if CU returns the money.

"It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith..."

https://home.treasury.gov/system/fil...-Questions.pdf

[JeremyW]

Seems to me that they don't qualify.