Spring Air unsecured debt $12.3M
By Larry Thomas -- Furniture Today, July 13, 2009
WILMINGTON, Del. — Bankrupt bedding producer Spring Air says its unsecured creditors are owed more than $12.3 million — including more than $6 million owed to six former licensees who sold their businesses in a 2007 buyout.
Documents filed in U.S. Bankruptcy Court here, however, indicate that the former licensees will likely get a tiny fraction of what they are owed. The company, which filed for Chapter 7 bankruptcy liquidation on May 29, says its only asset is $26,299 in cash.
Total liabilities are listed as $269.3 million, a figure that includes $245.2 million in secured debt held by American Capital Ltd., the private equity firm that was Spring Air's majority owner.
Spring Air shut down its corporate factories without warning on May 5 and May 6. Court documents show the company sold its intellectual property, personal property and inventory for $3.5 million on May 7 and May 12 to entities controlled by former licensee Ed Bates.
Bates formed a new company called Spring Air International LLC and intends to market the brand nationwide. The Boston factory once owned by Bates has been reopened and several senior executives have been hired.
Bates is one of the former licensees who also is listed as an unsecured creditor with a claim worth $1.16 million.
Other former licensees named, and the amounts owed, are Goode Price III, Birmingham, Ala., $721,100; Steve Ewing, Phoenix, $1.44 million; Tom Leduc, Salt Lake City, $993,283; Joe Carman IV, Tacoma, Wash., $1.32 million; and Lester Mesner, Denver, $577,367.
Three independent Spring Air licensees in the United States and two in Canada have remained in operation throughout the recent turmoil.
Many of the other unsecured creditors are law firms, marketing companies, shippers and employment agencies.
However, court filings show foam supplier Foamex is owed $420,759, ticking supplier Bekaert is owed $80,050, and the World Market Center in Las Vegas is owed $51,702.
Components supplier Leggett & Platt is listed as a secured creditor that is owed $11.76 million.
The court documents also show that Spring Air was sued by 10 vendors and two former executives in 2008 and 2009 for nonpayment of bills.
Former Spring Air president Jim Nation, who resigned in August 2007, accused the company of failing to give him more than $100,000 in severance pay that was due, while former vice president of sales Kevin Damewood sued the company for more than $50,000 in a dispute over the non-compete clause in his employment contract. Damewood left the company last September.
The bankruptcy court filings show the Damewood case was settled for an unspecified amount of money on May 13, while the Nation case is still pending before the American Arbitration Assn.
According to court documents, Spring Air also was sued in 2008 by consumer Lyndsey Maher in small claims court in Franklin County, Ohio. Maher claimed she had a defective Spring Air mattress, and was awarded $1,685.25 in a default judgment in October. A default judgment typically is awarded when a defendant fails to answer a lawsuit or doesn't show up in court.
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