Howdy, neighbor: Rival opens next door

Monday, June 30, 2003

MEMPHIS, Tenn. - Greg Pilant may have ended up with a raw deal when his play to buy a competing HME out of bankruptcy fell apart, but he’s not singing the blues. Instead, he’s opening a home medical equipment store right next door.

“I think it will make it a powerhouse for customers to be able to drive to one area, park the car and end up, one way or another, with what they need,” said Pilant, the owner of Viles Medical Supplies.

That may be so. But in a perfect world, instead of putting the finishing touches on his next-door location, Pilant would have already merged Viles Medical into the Allied Medical location.

Here’s what happened:

Earlier this year, Viles Medical signed a contract with Allied’s creditors to manage the bankrupt HME with the goal of ultimately acquiring it.

Viles began managing Allied Feb. 13. Pilant and crew quickly turned Allied from a loser to a money maker by: reducing staff and giving contracts to the best employees; restocking Allied’s rental inventory, which had mostly run dry; using Viles’ staff to make deliveries and performing other necessary business tasks.

“We were pretty committed at that point,” Pilant said. “We gave it a lot more value.”

So committed was Pilant - and certain he’d be able to buy Allied - that he took out a lease on the Allied location.

Then the deal began to go south. Rather than allowing Viles to acquire Allied, the bankruptcy judge decided to put it up for bid. Viles Medical lost the bid to American Health Centers, a large healthcare conglomerate with headquarters in Parsons, Tenn. American bid in excess of $200,000 for Allied, an amount Viles couldn’t match.

Viles stopped managing Allied April 9.

Now Pilant had a problem: a bulked-up workforce and a five-year lease on the Allied building but no Allied. Oddly enough, the building’s owner had an open site next door and offered to let Pilant transfer his Allied lease to it.

What happens next is anyone’s guess.

Pilant and his CFO Marsha McNair both relish the move from a warehouse location to a site with more foot traffic and retail potential. As for the unusual position of operating next door to a competitor, the duo prefers to look on the bright side.

“We are not going to try and price cut,” McNair said. “We’ve already had customers call who have been to Allied, and Allied has referred them to us for something Allied didn’t have in stock. At this point, we are anticipating a friendly business relationship.” HME