World Imports files for Chapter 11 bankruptcy protection
Heath E. Combs -- Furniture Today, July 19, 2013
PHILADELPHIA - Full-line supplier World Imports has filed for Chapter 11 bankruptcy protection in the Eastern District of Pennsylvania.
The company said a number of factors led to the filing, including a large antidumping tariff, an unsuccessful new software system and write downs of bad debt.
World Imports said in court documents that it has an outstanding balance on a line of credit with PNC Bank for about $11.1 million and about $3.6 million in unsecured trade payables.
The documents said it filed Chapter 11 to preserve its business as a going concern, adding that the business is worth more than the PNC debt and all other secured debt.
Deliveries will continue and World Imports plans to unveil a 2014 catalog later this month. The company also said it has partnered with a large trucking company to allow for the implementation of a new next day delivery program to New York, New Jersey and Philadelphia area customers.
Company officials said the filing should allow it to emerge as the profitable company.
"We have outstanding vendor relationships. They've been extremely open and understanding so far," said Marc Luber, president.
"Our customer response so far has been really positive. We're a family business and we've been doing it 27 years, so a lot of our customers know us personally and have reached out to show their support for us so we appreciate that."
Among the events that led to the filing, World Imports cited the acquisition of Hamilton Spill's assets, which took place in 2011. The Hamilton Spill inventory in Vietnam did not continue to sell profitably and the expense of its facility there - which World Imports shut down in 2012 - outweighed the profits.
The company also said that its payment of a $700,000 in antidumping tariffs on imported products at the end of 2011 severely affected its cash flow. In 2012, court documents said, World Imports also uncovered an inventory theft ring involving multiple employees.
Other reasons for the filing included a new Chicago distribution center that opened at the end of 2011 and didn't meet sales projections. It has operated at a loss.
Also, implementation of a new Enterprise Resource Planning system to improve operations was unsuccessful and negatively impacted customer service. The system caused the company to over-order product for more than a year, resulting in excess inventory sold at deeply discounted prices.
The company also said a sluggish first quarter and delayed federal tax refunds contributed to the filing.
Listed in the filing were four companies: World Imports Ltd., World Imports Chicago, LLC, World Imports South, LLC., and 11000 LLC.
World Imports Ltd. was founded in 1986 by Stan and Sandra Luber and handles the company's direct container business. It acquired the assets of Hamilton Spill to acquire key customers of that company and its mixed container warehouse in Vietnam.
11000 LLC was formed in 1999 and is the owner of World Imports' Philadelphia operations facility, which leases a portion of its real estate to a charter school and cellular services provider.
Formed in 2009, World Imports South operates its warehouse in Walls, Miss. - which the company said has been steadily profitable since its inception. Formed in 2011, World Imports Chicago opened a warehouse facility in the city in an effort to gain more of a national presence.
World Imports Ltd., WI South and WI Chicago's assets as of June 30 totaled about $3 million plus accounts receivable of $9.2 million and total inventory of about $8.8 million.
As of the petition date, World Imports Ltd. and Chicago and South were joint borrowers on the line of credit with PNC Bank. 11000 LLC granted the bank a mortgage on its Roosevelt Boulevard property to help secure its loan.
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