If the items at the Midtown Pup-Up Shop look familiar, they are. The books, the furniture and even the coffeemaker came from Outwrite, the popular LGBT retail spot that collapsed into bankruptcy in January.
It’s an effort by Outwrite owner Philip Rafshoon (second photo) to pay off the $184,000 in sales taxes he collected but didn’t pay to the state of Georgia for several years as the store struggled financially. Though a sizable chunk of the $508,000 in debt that Outwrite faced when it closed on Jan. 26 will be discharged when its bankruptcy case is closed, the tax debt is a liability that passes to Rafshoon.
Property inside the store, including unsold merchandise, was abandoned by the trustee, who argued in a court motion that it had “no recoverable value.” So it was turned over to Rafshoon, who now is selling it over three weekends in a make-shift retail location on Juniper Street. The proceeds will pay down the sales tax debt, which Rafshoon said Tuesday was closer to $166,000 when the store closed.
“The trustee abandoned the merchandise and the fixtures and gave them to me and said sell these and pay the taxes,” Rafshoon said. “I’d love for it to bring in a good chunk of those taxes.”
C. Brooks Thurmond, appointed by the U.S. Bankruptcy Court to oversee the Outwrite filing as trustee, said that proceeds from his liquidation of contents of the store would have paid administrative expenses first, including a portion of the nearly $40,000 in past due rent.
“The biggest problem in this case is that the rent on the space would have eaten up all of the money that came from the sale,” Thurmond said. “It wouldn’t have kicked started the case very well.”
No creditors objected to abandoning what was left inside Outwrite when it closed, he added.
“I anticipated that the debtor would dispose of the property somehow. If that involves getting money for it, that’s OK because I abandoned it. I don’t have any interest in it anymore,” Thurmond said.
Rafshoon said the pop-up store was well-received on March 3-4 for its first weekend in donated retail space at 905 Juniper Street. The store will open again for the next two weekends.
“We had a good response from a lot of people and it was a good chance to reconnect with a lot of people who were Outwrite regulars,” Rafshoon said. “We are just thankful that people showed up and the level of support we had.”
Customers at the pop-up sale were not charged sales tax last weekend, according to a receipt from a purchase provided to Project Q Atlanta. Rafshoon said his accountant advised him that sales tax did not need to be collected during the sale.
“This is a personal sale and it is not something that I am making a profit on. I am selling the items for less than I paid for them and it is sort of akin to a garage sale,” Rafshoon said.
When it closed, Outwite owed money to scores of local and national businesses and suppliers, including unpaid rent to its landlord Jodaco ($39,779), taxes to the city of Atlanta ($1,763), Fulton County ($3,000), and the state of Georgia ($184,000); credit card debt of more than $88,000 and more than $95,000 to book publishers.