Judge requires Furniture Brands to set up utilities account
October 8, 2013-- Furniture Today,
WILMINGTON, Del. — A U.S. Bankruptcy Court judge has ordered Furniture Brands International to deposit nearly $1 million in an interest-bearing bank account to cover its future expense obligations to utility companies.
Judge Christopher S. Sontchi wrote that this account should be maintained over time with a minimum balance of $990,000, an amount equal to two weeks service. This figure is based on the historical average cost of utilities expenses Furniture Brands has incurred over the past 12 months.
The largest portion of this account, $331,870, has been reserved for Duke Energy Carolinas and another $200,000 has been reserved for Tombigbee Electrical Power Assn. Another $105,233 has been reserved for Piedmont Natural Gas Co.
The balance is for other energy providers that include the City of Okolona Electric Department ($31,000); the City of Tupelo Water and Light Department ($2,700); Georgia Power Co. ($1,199); Lee County, Miss. ($2,500); Duke Energy Florida ($3,608), Connecticut Light and Power ($4,583); Yankee Gas Service Co. ($993) and Virginia Electric and Power Co. ($12,472).
In return for the setting up and maintaining this account, the court ordered that these utilities cannot alter, refuse or discontinue service based on their concerns regarding bills that were unpaid before Furniture Brands International's Sept. 9 Chapter 11 bankruptcy filing.
The utilities previously argued that they needed some assurance that Furniture Brands would continue to pay its utility bills. Among the requests was to set up an account with adequate reserves to cover the expenses over time.
The utilities also originally feared that the account would be undercapitalized and that it could be depleted by other utilities. They were also concerned that FBI didn't propose access procedures or limits and that the account wasn't required to be replenished.
In a related bankruptcy proceeding, Judge Sontchi approved FBI paying certain critical foreign and domestic vendors prepetition claims not to exceed $13 million. FBI said this was important in order to continue receiving products and services from those vendors, which were not named in the order.
In return, these vendors are required to continue providing goods and services on favorable terms to FBI. If a vendor accepts payment from FBI and fails to provide service on FBI's terms, the company can recover this money or apply as a credit to any outstanding postpetition claim from that vendor, the court said.
Related Content By Author
Remembering F/T News Editor Jay McIntosh