ORANGE COUNTY IN BANKRUPTCY : Vendors Pushed to Brink of Insolvency Themselves

As the Orange County bond crisis drags on, financial hardship is gradually becoming a life-and-death struggle for some of the small businesses that depend on the county as a major customer.

Impressions Unlimited in Santa Ana, which makes stick-on decals for county vehicles and sheriff’s patrol cars, is owed $4,000 and laid off two of its nine workers within a week of the county’s Dec. 6 bankruptcy.

Owner Patrick E. Cory said the bigger problem will be trying to compensate for the loss of county orders that make up 30% of his business. If he can’t find new customers quickly, he said the company--already weakened by recession--might have to file for bankruptcy itself.

“This could be the (last) straw,” he said. “I’m trying to dredge up more business on the outside to fill the gap.”

Cory’s company is one of about 1,000 small vendors that Orange County depends on for everything from pencils to handcuffs.

The precarious situation is fairly typical for vendors, many of which have only a few employees, according to Mary Ann Schulte, chief financial officer for a Santa Ana construction company that is organizing a group to represent vendors’ interest in Bankruptcy Court.

“We have some really sad stories,” she said. “I talked to one company (owner) who said they had to take everything out of personal savings and there is nothing left. Another vendor said two weeks more and they run out of money.”

These troubled small companies lack the high-priced lawyers of a Bank of America or a Merrill Lynch--two key players in the bankruptcy. And they fear that if they acknowledge their difficulties, they will be spurned by their other customers and their subcontractors out of fear that they won’t be able stay in business.

“The big problem is they are very small businesses so they are kind of hand to mouth,” Schulte said. “They just don’t have the cash flow to make it work for them.”

To help seek faster payment from the county, Schulte said a vendors meeting will be held at 2 p.m. today at the Orange County Hall of Administration. “We want to create one large voice that can be heard,” she said.

One landscape company executive, who spoke on condition that neither he nor the company be identified, said his business is owed $60,000 and may eventually have to cut all but two workers.

For now, he said, “we are trying not to put out cash outlays until we find where we stand.”

The bankruptcy is also taking a toll on individual workers. The county’s filing tied up $6,000 in commissions that sales engineer David Telenko would have earned on the computer equipment and software he sold the county.

“This was my paycheck for the entire month of December,” he said.

“We just bought our house in August, and we are adjusting to the $2,000-a-month mortgage.”