Linwood Furniture administrator seeks Chapter 7
August 10, 2012-- Furniture Today,
WINSTON-SALEM, N.C. —- The U.S. bankruptcy court administrator in case goods manufacturer Linwood Furniture's case filed a motion this week to convert it to a Chapter 7 proceeding.
Usually, Chapter 7 means liquidation and sale of a company's assets.
Linwood filed for Chapter 11 bankruptcy protection in March. It sought approval to sell its assets at auction on Aug. 6 with a minimum bid of about $2.56 million.
Linwood officials reported last month that it had interest from several prospective buyers. But on Thursday, the company withdrew the motion to sell its assets and said that no bids were received by the deadline.
Officials with Linwood were unavailable for comment early Friday.
In court documents, the bankruptcy court administrator said it is seeking to convert the case to a Chapter 7 liquidation, due to a continuing losses to the estate, failure to file monthly reports and failure to pay second quarter Chapter 11 fees.
The administrator noted that it did not believe Linwood is in a position to continue operations, and, it added, was not conducting any ongoing business.
Court documents filed last month said the company could run out of cash in August.
The March filing was partially driven by the company's recent efforts to focus on being an OEM manufacturer for hospitality furniture companies, which resulted in a high volume but low margin business.
Company officials last month said Linwood was still producing several furniture lines and that that a sale of its assets could be the best way to exit Chapter 11 and stay in business.
In its original Chapter 11 filing, the company listed about $3.7 million in assets and $6.9 million in debt.