Corona Printing, a 21-year-old business, shut its doors March 17. Unless a financially viable buyer is found, the company's presses and other assets, including its customer list, will be auctioned next Friday.

And there's a debate over what caused the demise of the company, which ran out of working capital and has more than $2 million in debt.

The former owner and founder, George Flambures, insists that Corona Printing was a money maker until he sold it to its current owner, BDG Design Inc., in February 1999. "You take a company that ran profitably for 20 years and run it into the ground in less than a year and you know there is something wrong," Flambures said. He said that, at the direction of his lawyer, he would not comment further.

However, James Bastion, lawyer for BDG Design Inc., contends his client paid too much for the business. He said the size of its customer base and sales never met expectations. Last year's sales, he said, didn't come close to the $1.4 million the company achieved in 1998, as reported in the Book of Lists compiled by The Business Press, a sister publication of The Press-Enterprise.

"They bought a company that wasn't up and coming. It was not on the move," said Phil Adishian, owner of Inland Mailing Services Inc., a direct mailing and commercial printing company on Pomona Road next door to Corona Printing. But Adishian also said the new owners didn't have the savvy to operate a printing business. He described the new owners as graphic artists

who had been one of Flambures' major customers.

It takes considerable know-how to thrive as a commercial printer nowadays, according to people in the industry. They say they have to be agile and innovative to compete not only with one another but with PC-driven desktop printing and the Internet, which has enabled businesses to communicate without paper.

Bastian, a bankruptcy and insolvency specialist, said Corona Printing is the fourth printing company he has handled in the last six months, and he believes he sees a trend developing.

"Businesses are being conducted in a more paperless environment and the printing needs are not as extensive in light of the Internet and e-commerce," Bastian said.

Corona Printing is the third commercial printer to close in the Inland Empire in the last year. The others were much larger concerns: Franklin Press in San Bernardino and Flyer Graphics in Riverside.

Tom Stodola, director of management services for the Printing Industries Association of Southern California, said printing companies are having to make hefty investments to stay technologically current while coping with slimmer profit margins.

Printing companies that specialize in services that directly compete with the Internet have been particularly vulnerable. Stodola said Franklin Press was handicapped because it built its reputation on printing directories, which he said are being replaced by online databases and lists stored on CDs.

Flyer Graphics was heavily into printing business forms that potential customers now can create with their own in-house laser printers, said Adishian.

But another form printer, Advance Business Graphics in Mira Loma, is flourishing, according to its marketing director, Craig Clark, by harnessing the Internet as an ally.

Clark said Advance Business Graphics did $46 million in sales last year and has been expanding by 8.5 percent annually over the past four years. To do that, he said, the firm has invested in technology so it can use the Internet to allow its customers to quickly place orders and make editing changes on their personal computers during the printing process.

Robert Hoder, manager of the adjustment bureau for the Credit Managers Association of California, said that although business liquidations are less common in today's booming economy, printing company failures seem to be on the rise. "We are getting more and more calls," he said.

One of the latest calls came from the owners of Corona Printing, which asked the nonprofit organization to liquidate the company's assets for the benefit of creditors.

Hoder said he tried unsuccessfully to keep the doors of Corona Printing open and sell it as a going concern. He said the owners had allowed the workers' compensation insurance to expire, and problems getting it reinstated prompted the association to close the business on March 17, laying off its 13 employees. So far, he said, the association has been unable to find a buyer with sufficient financing to jump-start the business again.

"We have our fingers crossed," said Larry King, senior vice president at the problem loan department of Imperial Bank, which is owed about $940,000 in secured debt. King said he prefers to see someone buy the entire business because a piecemeal auction usually generates less money.

Hoder said it is unlikely that an auction of assets will raise enough money to pay the bank debt. He added that unsecured creditors probably will get nothing.

Among the unsecured creditors are trade vendors and Flambures who, according to Bastian, holds a note for about $1.1 million as part of the deal to sell the business. Bastian said Flambures already has received about $600,000 in cash.

Bastion said the principal owner of BDG Design, Terrance Murphy, was unavailable for comment because he has a serious heart condition and was trying to avoid stress.

A number of Inland Empire printing company owners said they intend to bid on equipment if Corona Printing holds an auction. "I hope to spend over $200,000," said Adishian, who has his eyes on a small color press.

Adishian said his printing business is doing very well, and buying equipment at auction is one way to keep down costs.

Leslie Berkman can be reached by e-mail at lberkman@pe.com, by phone at (909) 737-1366, or by fax at (909) 734-2518.

Published 4/8/2000