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Burbank City Council candidate says bankruptcy was a 'business decision'

December 26, 2012|By Alene Tchekmedyian, alene@tchekmedyian@latimes.com

City Council candidate David Nos filed for Chapter 13 bankruptcy last December -- a "business decision" he said he was forced to make after encountering circumstances beyond his control amid a rough recession.

Nos had been running his printing business — CBFS Inc. — in Burbank for about 30 years. In spring 2010, he renewed leases on two Xerox machines for four years at roughly $2,000 a month, and a third machine for five years, also at roughly $2,000 a month, according to the lease agreement listed in a lawsuit filed by Xerox.

The recession, and the fact that one of his largest customers — a trade show operator — was shifting its model to include more digital services and therefore less printing, bruised his business, Nos said.

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His company’s gross income in 2007 was about $600,000; in 2008, it dropped to just under $500,000, he said.

The financial troubles were exacerbated, he said, when Xerox leased copy machines to his largest account — cutting him out of the equation and costing $200,000 a year in lost business.

“They had another sales team that went directly to my accounts and sold them the machines,” he said. The customer, he added, was a service company with 1,200 employees, but he declined to give the name.

U.S. Bankruptcy Court records show a further decline in his business’ gross income, which dropped from $255,736 in 2009 to $189,803 in 2010, and to $143,073 in 2011.

What Xerox did was legal, Nos said, since he didn’t have a non-competition agreement.

“The market’s open,” he said.

To make up for declining business, Nos said he acquired another printing business and began to offer email management services.

While trying to rebuild his company, Nos struggled to make the monthly lease payments on the three machines, he said, falling about five months behind.

“We couldn’t build the income fast enough at that point to recoup the loss,” he said.

So he shut down the CBFS corporation in September last year to prevent Xerox from coming after him personally, and a day later, opened a sole proprietorship in the same name, he said.

On Dec. 27, 2011, Nos filed for Chapter 13, which is designed for those with a steady income and allows a debtor to keep his or her property and pay all or part of the debts over time.

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