Mike Burns, majority owner of Backwoods, forced out

Mike Burns, a 64.5-percent shareholder and for 21 years the president of Backwoods, a Wichita, Kan.-based, retailer with eight stores, walked away from his job on Aug. 28 after signing the company over to its founder and 26-percent shareholder, Lewis Mull. A minority shareholder and member of the board owns the remaining 9.5 percent.
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Mike Burns, a 64.5-percent shareholder and for 21 years the president of Backwoods, a Wichita, Kan.-based, retailer with eight stores, walked away from his job on Aug. 28 after signing the company over to its founder and 26-percent shareholder, Lewis Mull. A minority shareholder and member of the board owns the remaining 9.5 percent.

By Friday, Aug. 29, vendors and others company contacts were in receipt of a letter from the new company president, Jennifer Mull (Lewis' daughter), and Lewis stating:

"The Board of Directors of Backwoods would like to inform you that Mike Burns (President) and Robin Burns (Buyer) have resigned their positions at Backwoods effective August 28, 2003. We wish them both the best in their future pursuits.

The founder of Backwoods, and Chairman of the Board, Lewis Mull, will remain as Chairman. The Board has named Jennifer Mull (current Board Member) as President and Chief Executive Officer. Suzanne Wilson-Miller will continue as a buyer for Backwoods and will be handling all lines moving forward. We want to assure you that all involved are committed to Backwoods and its future success."

While the letter makes it sound as if Burns departed willingly, not all is as it appears.

Jennifer Mull told SNEWS that her father Lewis became involved as a non-silent partner a few months ago when the bank insisted he sign a personal guarantee before issuing the line of credit -- some $1 million worth.

"The bank told us that the current management had not supplied reasonable budgets, adequate financial information or a strategic business plan, and insisted my father get involved or they would foreclose on the LOC," said Jennifer Mull. "While it is true that Mike was the majority owner of the company, the bank made it very clear that from an asset standpoint, that was not where the financial stability of the company lay."

Jennifer Mull told us that once Lewis got involved with the company on a daily basis, her father worked with Burns to establish a board and achieve "real input" into the company operations.

That board included Mike Burns, Robin Burns, Jennifer Mull and Lewis Mull.

"We worked very hard to make that work, but it reached the point where my father insisted on veto power, should it get to that point, since he was the one going to the bank for the money the company needed," Jennifer Mull told us. "He was not going to sit in a board meeting and be loggerheaded, but Mike did not want to go along with that."

According to Jennifer Mull, it came down to the Aug. 28, Thursday morning meeting where her father told Burns either you go or I go.

"Two hours later, Mike walked into my Dad's office and said, 'It's all yours.'"

As with any story, there are two sides. Burns told SNEWS that Backwoods had been debt-free and paying off the bank LOC every six months until that fateful day, Sept. 11, 2001.

"Retail slowed down after that and to compound the problem, we did not have a formula to compete with a large box coming into our markets. REI came into Dallas and in three to four years, we had lost 40 percent of our volume. REI also came into St. Louis and we lost nearly as much volume and as a result, made the decision to close both (the Dallas and St. Louis) stores in the (first quarter) of this year -- which hurt us on the bottom line," Burns told SNEWS.

"That got the bank excited and combined with the fact our business had been trending down in some markets, they wanted Lewis to come along and co-sign the note, and I had no problem with that," Burns added.

Suffice it to say things got increasingly contentious, according to Burns, with an attorney finally telling Burns that there was no way that Mull could have veto power since Burns was a majority owner.

"At the 11th hour, I told him I would not cosign the note with him and he told me, 'Fine, we'll just liquidate the company.' That was on Wednesday, the weekend before Labor Day and the note had to be renewed by Tuesday," said Burns.

Burns told us that on Thursday, at 8 a.m., Lewis Mull walked in and told him that either Burns takes his stock, or he would take Burns' stock.

"He had me then, and he knew it. There was no way we could secure financing in such a short time so we would end up having to liquidate Backwoods. I did not want to be the one at the helm when we took the company down," said Burns.

"My wife and I signed over the company at 2 p.m. and they told us to leave the building immediately. At 4:30 p.m., we returned to finish signing documents and then at 4:45 we walked downstairs to a stunned office who had just been told we had resigned and the Mulls were taking the company over."

SNEWS View: Twenty-one years of running a company, and Burns gets treated worse than a stray dog. No thank you, no handshakes, no attempt to make things work, no offer to buy Burns out? Jennifer Mull tells SNEWS that Burns turned his stock over in exchange for being released from any personal liability for the business. And while in black and white that may be true, every inch of gray area surrounding this mess smells worse than a city garbage dump. As for the future for Backwoods, SNEWS wonders along with quite a few Backwoods vendors we spoke with how the company will fare sans Burns' leadership and highly-regarded industry reputation. Jennifer seems like a sharp cookie, but the fact is, she has absolutely NO retail experience, and now she's at the helm of a company in need of imagination and real retail business savvy to steer it through choppy waters. One could argue that since she comes from outside of the industry, her outlook is a fresh one and could benefit Backwoods, and that might prove to be true. Even she has to realize though, if things don't pick up quickly and sales start to climb within the next year, most folks will be pointing to Aug. 28, 2003, at 4:45 p.m. as the beginning of the end for the company. As for Burns, he'll have no difficulty landing a job. Lewis Mull apparently has no idea just how strong a reputation -- well-deserved reputation -- Burns has as a retailer, leader and industry veteran. Backwoods' loss will be another company's gain.

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