Nationwide seeks to sell all its stores
By Clint Engel -- Furniture Today, April 28, 2002
Norcross, Ga. — Nationwide Warehouse & Storage is scaling back its store count again, then hopes to sell what's left in an effort to avoid foreclosure by its debtor-in-possession lender.
The promotional Top 100 company, which filed for Chapter 11 bankruptcy protection in October, has asked the court for permission to auction off substantially all of its remaining assets at 63 stores in 20 states, and at corporate headquarters here.
Last year, Nationwide brought in new management just before filing for bankruptcy and as it was shedding about 46 under performing stores.
It planned to emerge this spring with about 115 stores doing an estimated $165 million in sales under new Chief Executive Officer Rick Meiser.
Meiser did not return telephone calls last week.
From the Oct. 12 filing through April 2, the company had net cash sales of $57.8 million, according to an operating report filed with the court.
At the time of the filing, Meiser said Nationwide had secured $7.5 million in debtor-in-possession financing from Quad C, a Charlottesville, Va.-based investment firm that purchased what had been two separate Nationwide companies in the late 1990s.
In a later court filing, Nationwide said the DIP financing amount was increased to up to $9.5 million, with FF Funding LLC as the administrative agent.
But business appears to have deteriorated, and on March 22, FF Funding issued a default notice. The current loan balance was about $3.6 million, and Nationwide had not received any additional funding, according to court documents.
The documents say Nationwide has been unsuccessful in finding a replacement DIP lender.
The retailer asked the bankruptcy court to allow it to reject leases, close unprofitable stores and conduct going-out-of-business sales as soon as possible. By reducing the store count, Nationwide said, it has "a greater chance of selling the remaining stores as a going concern."
Earlier this month, the court approved a request to close 28 stores in 16 states, including six in New York and three in Massachusetts. Six other New York stores also were approved for closing at Nationwide's discretion.
On April 12, the retailer filed an emergency motion asking the court to approve the sale of 16 stores in Canada and New York to David Belford for $1 million unless it gets a better offer. The stores included the second set of six New York stores listed for possible closing.
But Nationwide withdrew that motion last week and noted that the agreement "was not viable," and attempts to renegotiate were unsuccessful. Now the company also is looking to close its Canadian stores.
Belford was an owner of Nationwide until March 1999, when NWS Acquisition Corp. acquired the business. He could not be reached for comment.
Last week, Nationwide asked the court to authorize an auction for the remaining assets. This will "afford the debtors the best opportunity to maximize the recovery to creditors," the company said.
Nationwide said that because it no longer has DIP financing, it needs to conduct the auction as soon as possible. It did not name possible buyers.
Don Mecke, vice president of sales and marketing for Standard Furniture, which has supported Nationwide on a cash-in-advance basis, said he has heard of two or three potential buyers, but could not name names.
Nationwide's business model is unusual in that it serves a low-income sector, but not through traditional credit-oriented or rent-to-own stores. Much of its business involves sale of goods put on layaway. At its height in 2000, the company had nearly 160 stores across the nation and U.S. furniture, bedding and accessory sales of more than $219 million.
That year, Nationwide accounted for about $8 million is sales for Standard, Mecke said. The current figure is less than half that, he added.
"Nationwide was a good customer, and I'm optimistic we will continue to do business in this market as other retailers (fill the void from closings) as well as take the chunks that are sold off," Mecke said. "We're going to be plugged in with the people that buy the pieces."
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