Maxed out 

It’s not personal, it’s just business

Page 2 of 3

The body count from Enron’s collapse is growing. Employees lost their inflated life savings when the company’s stock – upon which they’d gorged their 401K plans like geese being corned for foie gras – became worthless. It’s hard to screw up a lot of sympathy for them; they were part of the problem.

Arthur Anderson, a big five accounting firm full of less than scrupulous suits, will hopefully disappear from the business scene for its lack of oversight, conflict of interest, dishonesty, destruction of evidence and corporate well of sleaze so deep and so poisoned they could be their own banana republic.

North American – and world – financial markets may well suffer because investors generally like to feel they can trust things like audited financial statements when deciding where to park they’re hard-earned retirement nest egg. No one believes there isn’t more lyin’ and cheatin’ out there waiting to be discovered.

Aaron Feuerstein’s company is in bankruptcy too. Malden Mills filed for Chapter 11 protection last November. A combination of too much debt, soft retail markets and an uncompetitive product line brought Mr. Feuerstein’s family-owned company to bankruptcy court.

If you don’t know who Aaron Feuerstein is, look in your closet. Just over 20 years ago, Malden Mills was, again, working its way through Chapter 11. Its main line of business – fake fur – was running out of steam. Knowing there was no future in fake fur, Mr. Feuerstein asked his R&D department to get to work and created a better sheep: to make a fabric superior to wool, which, at the time, was the material of choice for those who wanted to stay warm and dry in the outdoors.

They came up with Polartec. Fleece. The mainstay of Whistler’s wardrobe. The fabric that changed the way we dress to play. Most of us would be naked without it. Or we’d all look like those oldtimey pictures of everyone dressed in big sweaters and woolen knickers.

So why is Malden Mills back in Chapter 11? Just before Christmas, 1995, a fire destroyed three of the company’s factories. Production of Polartec went up in smoke. By the light of the still burning buildings, Mr. Feuerstein promised his employees three things. He’d keep paying them; he’d maintain their benefits; he’d rebuild the factories.

The popular press treated him like a saint. The business press, pundits, B-school hacks and suits in general thought he was crackers. What kind of idiot would rebuild a textile plant in Massachusetts? What 70 year old in his right mind wouldn’t take the insurance money and run quickly toward the nearest Florida retirement condo? What irresponsible businessman would pay employees when they couldn’t work? Call the looney bin; get help, Lassie.

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