Bankrupt El Amal liquidating inventory; company president says unfair competition broke business
Nearly three months after abruptly closing down its local drugstore chain and filing for Chapter 11 bankruptcy protection, El Amal is liquidating the inventory it has left, the company in charge of the transaction announced in an ad published Tuesday.
More than $3 million worth of products formerly in stock at 14 El Amal locations has been consolidated at two locations in Toa Baja and Carolina, and is being sold at a 60 percent discount through Saturday.
Company President Mohammad Yassin told lawmakers during a hearing Tuesday that unfair competition on the island was to blame for El Amal’s disappearance. When the company filed for Chapter 11 protection on Feb. 25, it reported $30 million in debt.
The executive said El Amal was unable to compete fairly with powerful rival Walgreens, which Yassin said was given “special benefits.”
“I believe there should have been more regulations to ease competition and make sure that every competitor had the chance to compete head-on, without an advantage or disadvantage,” said Yassin during testimony offered in a public hearing of the House Consumer Affairs Committee chaired by Rep. Jorge Navarro. “For many years we battled against a company like Walgreens and suggested a law as simple as legally requiring a drug maker that grants benefits to Walgreens, to grant them to community pharmacies as well.”
The hearing was held to analyze the process the company followed when it shut down without warning on Feb. 18, disregarding regulations requiring drugstores to give prior notice to its patients about its plans to close. El Amal came under fire by local health officials who were flooded with complaints from patients whose access to prescription medications was cut off when stores closed.
Competition crippled retailer
Yassin said the company had exhausted all of the possibilities it had to remain open, saying El Amal was a victim of the island’s regulatory framework.
“We have been victims in this. If we would have had the tools to compete on better ground where everybody is standing at the same level, we would have achieved more,” he said. “If you ask me what the most appropriate legislative tool would be, I would say that lawmakers should demand that there are equal opportunities.”
Although he did not mention it, it is widely known that large retail chains use their leverage to buy in bulk at lower prices, which they will often pass down to consumers as discounts at the register. Smaller companies, such as El Amal, that lack the same buying power must keep their prices at a certain level to make money.
Privately held El Amal drugstore began operating in 1973 as a single location in Río Piedras, owned by businessman Saleh Yassin, Mohammad’s father. The chain slowly expanded during the 70s and 80s, with new store openings in Carolina and San Juan. In 1995, El Amal purchased another local drugstore chain, Farmacias Moscoso. At its peak, El Amal generated some $200 million in revenue, and employed about 1,500 people.
Prior to disappearing from the market, El Amal had 22 stores left, six of which were sold before closing in February, Mohammad Yassin said.
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