Joan Fabrics files Chapter 11
Sale of assets possible, company says
Susan M. Andrews -- Furniture Today, April 11, 2007
TYNGSBORO, Mass. — Joan Fabrics, at one time the largest U.S. upholstery fabric supplier, said Tuesday it has filed for Chapter 11 bankruptcy protection.
Joan and its wholly owned subsidiary Madison Avenue Design, which creates specialty designs for Joan Fabrics and other parties, filed voluntary petitions for reorganization. An executive also said the companies have been talking to suitors interested in acquiring some or all of the firms’ operating units.
The companies also said they have received debtor-in-possession financing of more than $10 million from lenders led by Bank of America and factor CIT.
Elkin McCallum stepped down last week as president and CEO of Joan, turning day-to-to-day operation over to interim management firm Carl Marks Advisory Group. Richard Heller of Carl Marks was named chief operating officer.
McCallum, who remains on the board of directors, was charged with fraud last month by the Securities and Exchange Commission in a civil case related to textile supplier Collins & Aikman. Eight other C&A directors and executives also are defendants.
Heller said the financing package “will allow us to meet the companies’ cash needs and give us opportunities to explore strategic options to determine the company’s future. We are already in contact with a number of firms who have expressed interest in acquiring some or all of our operating units. We believe that such a sale will provide the most advantageous result for our employees, customers and creditors.”
According to the company’s announcement, Joan Fabrics’ 700 employees are unaffected by the filing and customers should expect business as usual in terms of products, delivery and service.
Heller said Joan Fabrics “has many positive advantages as a business” that will “provide a solid foundation for the business to be restructured and emerge successfully from Chapter 11.”
Joan Fabrics, founded in 1932, has manufacturing facilities in North Carolina and an affiliate in Mexico.
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Joan Fabrics files Ch. 11
Apr 29, 2007
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