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Chris Smith, founder of a once high-flying, Internet-based Gulf Coast pool supply business, is drowning in debt caused by an admitted massive miscalculation in the economy.
So much debt that the company Smith founded, Port Charlotte-based Aqua Superstore, filed for Chapter 7 bankruptcy in U.S. federal court in Fort Myers late last year. The company has $1.995 million in total liabilities compared to $65,615 in assets, court documents show.
The liabilities are mostly comprised of separate loans worth at least $150,000, including one with the Port Charlotte branch of M&I Bank. Assets, according to court documents, are mostly made up of a 2007 company-owned Maserati, worth about $60,000.
The bankruptcy petition is under review by a federal bankruptcy trustee. The trustee will decide if Smith and Aqua Superstore meet the requirements of Chapter 7, which would allow Smith to liquidate any company assets in order to repay creditors.
The trustee will also decide if Smith is allowed to essentially transfer ownership of Aqua Superstore to SmithCo Holdings LLC, a separate entity Smith owns with a few minority partners. Creditors' attorneys say they will contest any transfer or sale of Aqua Superstore to SmithCo.
Smith, who boasted to the Review in a Sept. 25 cover story that Aqua Superstore had brought in $1 million in revenues last August, now says his biggest mistake was investing in other businesses and companies before and during the recession.
“We were bleeding the profits from Aqua Superstore to grow those other businesses,” Smith, 26, tells Coffee Talk. “That was our major downfall.”
Those other businesses include online commerce sites for outdoor kitchen and lawn equipment and a $1.5 million purchase of a commercial real estate building in Port Charlotte.
Smith says his work on those other businesses caused him not only to borrow from Aqua Superstore, but to borrow from a host of other lenders, mostly on credit cards. That work also caused Smith to lose focus on Aqua Superstore, one of 10 Gulf Coast companies to make the 2009 Inc. 500 list of the nation's fastest-growing companies. (See Review, Sept. 24, 2009.)
Smith told a Horatio Alger tale of entrepreneurial success in regards to Aqua Superstore: He founded the company, essentially an Amazon.com for pool gear, in 2004, when he was 21 and a college kid who sought extra cash.
The company, according to Smith and the Inc. 500, grew annual revenues 2,695% from 2005 to 2008, from $267,200 in 2005 to $7.5 million in 2008. Its niche was finding and selling anything pool related, from baby floats to pool slides. It also opened warehouses in Florida and a few more out of state when business grew.
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