Krause's options fade
Two offers fail for 57 remaining stores
By Clint Engel -- Furniture Today, October 7, 2001
Brea, Calif. — It looks like the end is near for Krause's Furniture and its sister company Castro Convertibles.
Liquidator Buxbaum Group was preparing last week for a second phase of liquidation sales after the failure of two bids to acquire certain stores and Krause's upholstery factory as a going concern.
Krause's, the Top 100 maker and seller of custom upholstery, filed for Chapter 11 bankruptcy protection in July, announcing plans to liquidate 32 of its 89 stores and noting that a group of investors, including management, wanted to buy the remaining 57 profitable stores, the factory and related distribution centers to continue the business.
The group had until Sept. 30 to complete a purchase, and the company said that if that did not happen, it anticipated total liquidation and the end of operations. But neither the management group nor a second group of investors was able to complete a deal.
A trustee was appointed last week and phase two of the going-out-of-business sales was out-of-business sales was before the bankruptcy court for approval, said Richard Neiter, an attorney representing Krause's.
There had been two offers to buy the stores as a going concern, he said. The Krause's management-led proposal stalled when it couldn't get lender Congress Financial "to agree to certain essential terms," Neiter said. An alternative proposal was led by the Hakakian Group, but the court didn't approve the assumption and assignment of leases, he said.
Philip Hawley, Krause's chairman and chief executive officer, bought into the company in August 1996 and has led it ever since. Neither Hawley nor Krause's President Herb Friedman returned telephone calls.
Alex Hakakian of Hakakian Group also did not return calls.
David Ellis, chief financial officer for Encino, Calif.-based Buxbaum, said late last week that Buxbaum expected to be approved as the phase two liquidating agent. But he added, "The company is still speaking to a few going-concerns offers, so there is still that white knight possibility. I can't begin to give you the odds on it."
Buxbaum was appointed by the bankruptcy court to run the first round of GOB sales at 25 of the first 32 closed stores.
Ranked No. 41 on Furniture/Today's survey of Top 100 U.S. furniture stores, the 28-year-old Krause's had sales of $151.5 million last year. It has not made a profit in more than six years and has lost more than $76 million since 1994.
In its bankruptcy filing, Krause's reported assets and debts each between $50 million and $100 million. General Electric Capital Corp. Equity Capital Group was listed as the largest unsecured creditor with a $10.7 million note.
As first reported in eDaily. For updates on this story, please seewww.furnituretoday.com.
-
Carls Furniture files for Chapter 11
May 25, 2011 -
Robb & Stucky closing
Mar 25, 2011 -
Storehouse headed for liquidation
Oct 5, 2006 -
D.C. retailer to close
Jun 4, 2006 -
Hakakians receive court OK to acquire Krause's
Oct 28, 2001
Featured Company
-
Brandwise Inc.
Brandwise serves a model - not just an industry - by integrating, automating, and optimizing the entire sales channel, from wholesale Suppliers to their Reps and the Retailers they service. In short, our software helps Reps and Suppliers sell more and create... more
VIEW ALL GALLERIES
