CATHERINE JUN Converse, whose shoes were first endorsed
in the 1920s, filed Chapter 11 bankruptcy last week.
By Noah Grand
Daily Bruin Contributor
The shoe company Converse, known for basketball, high tops and
its trademark star, filed Chapter 11 bankruptcy last Monday after
selling an estimated 575 million pairs of “Chuck
Taylor” high top shoes since their creation in 1921.
“It’s a shame,” said Hassan Shihab, a
fourth-year history student. “I’ll miss them.
They’re good shoes.”
Chapter 11 bankruptcy is filed so a company can continue
operating and maintain possession of its property while
reorganizing and restructuring its debt.
Converse has already closed their Massachusetts headquarters and
could not be reached for comment.
The company fell into debt after acquiring clothing maker
ApexOne in 1995 and has fallen further into debt as demand for
athletic shoes has fallen worldwide, according to a Converse
statement.
Converse, which already does half its production in Asia, closed
its North American factories at a cost of 1,000 jobs. This
production will be moved to factories overseas. The shoes will be
distributed by Global Brand Marketing, Inc. under a licensing
agreement with Converse, who adds the brand name to the product.
Converse already uses this model in overseas markets.
Though the filing may be looked upon with a sad tinge of
sentimentality by many, companies often go out of business as their
competitors develop better products, according to Bryan Ellickson,
a professor of economics.
“It all goes back to the idea of creative destruction. A
new thing comes along and destroys the old,” he said.
Even though the new product may be better, Ellickson said a lot
of people can get attached to the old products.
“There’s a lot of that that happens. People get very
attached to things. I know people who feel the CD is a horrible
replacement for the record,” Ellickson said.
He recalled the loss of a symbol from his childhood.
“I had a Monroe calculator in school. It was about a foot
long and a foot tall, and it only did multiplication and
division,” Ellickson said. “When the Rand corporation
was getting rid of their old Monroe calculators I bought one, but
eventually I threw it out. I can’t have my garage being a
museum.”
Converse was a popular basketball shoe in the ’70s and
’80s, endorsed by Julius “Dr. J” Erving and
Earvin “Magic” Johnson among others. The company is
currently endorsed by 20 NBA players, including Karl Malone,
Michael Dickerson and Brevin Knight. Most shoe companies create a
shoe for their endorsers, such as the Nike Jordan shoe, but
Converse does not. Rather, they endorse Converse’s Chuck
Taylor series of shoes, named after their first endorser from the
1920s.
“I wore them in high school. That was the style. We
didn’t have all the options that you do now,” said
Gloria McBride, accounting coordinator for the economics
department. “Converse high tops were required for basketball
for the support that they gave the ankle.”
While best known for basketball, Converse also became a fashion
icon when they began to release shoes in various colors, including
black, blue and green.
“I remember my daughter wore them because of all the
colors,” McBride said.
Many students remember wearing Converse in high school and are
surprised about company filing for bankruptcy.
“In high school I had five friends who all wore the same
Converse all-star shoe. I thought they were solid,” said Ben
Lacar, a third-year biochemistry student.
Despite filing for bankruptcy, some hope Converse will
rebound.
“This voluntary filing … will give us the opportunity to
return Converse to financial health,” Glenn Rupp, CEO of
Converse, said in a statement.
Ken Klee, a bankruptcy law professor, said Converse’s
filing differs from most companies who file Chapter 11
bankruptcy.
“Most companies want to keep the brand name and put it in
a trust as a way to pay off their creditors, but it doesn’t
sound like it here,” Klee said. “Converse already has a
credit agreement.”
The common trend for Chapter 11 bankruptcy is to sell all
production and hold on to the product name to pay their debt,
according to Klee.
Converse, however, expects that their credit agreement with
Bankers Trust Company will allow them to continue operating and
meet demand while they are in Chapter 11 bankruptcy. They expect to
release their back to school line of shoes for 2001 on
schedule.