Rockaway in Chapter 11
Bedding retailer to close unprofitable stores
By Clint Engel -- Furniture Today, April 30, 2007
Randolph, N.J. — Top 100 company Rockaway Bedding has filed for Chapter 11 bankruptcy protection with debts to its top nine industry creditors of more than $8.4 million and plans to close unprofitable stores.
The retailer, based here, had 185 stores at the end of last year and estimated 2006 sales of $143 million. It filed for protection April 9 in U.S. Bankruptcy Court in Newark, N.J., listing assets and liabilities each in the $1 million to $100 million range.
According to court documents, its largest unsecured creditors are Tempur-Pedic, with a claim of $2.1 million; Sealy and its Stearns & Foster brand, owed nearly $1.8 million combined; and Simmons, owed $1.6 million.
Executives at Sealy and Simmons declined comment and officials with Tempur-Pedic couldn't be reached.
A man answering Rockaway President William Paladini's phone said Paladini no longer works there. He refused to identify himself or comment further. CEO Anthony Licastro could not be reached for comment.
According to Licastro's affidavit supporting the filing, Rockaway posted losses in two of the past three years, including nearly $2 million in 2006.
The retailer was in violation of certain covenants of its credit agreement with PNC Bank as of Dec. 31. When it filed for bankruptcy, it owed about $3.7 million under the agreement, according to the affidavit.
Licastro said in the document that before filing, Rockaway's leaders "determined that, in order to continue as a going concern and return to profitability, it was necessary for them to significantly downsize their operations, reduce overhead expenses and close under-performing stores."
He added that many landlords refused to let the retailer out of its leases "and many vendors would not compromise their claims."
William Katchen, a bankruptcy attorney for the retailer, told the Newark Star-Ledger that Rockaway would close unprofitable stores with expensive leases, although none in New Jersey.
"We're here, we're staying here. That's our core," the paper reported Katchen saying. "The New Jersey market is a keeper for us."
According to its Web site, Rockaway now has 194 stores, including 63 in New Jersey, 62 in New York and others in Pennsylvania, Delaware, Connecticut, Maryland and Virginia.
Katchen told the Star-Ledger that factors leading to the filing included unprofitable operations and a weak economy. He did not return calls from Furniture/Today.
Here's a list of Rockaway Bedding's largest unsecured industry creditors and their claims, according to bankruptcy documents.
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Tempur-Pedic, $2,103,513
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Simmons, $1,619,322
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Sealy, $1,203,468
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Serta, $844,786
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King Koil and Comfort Solutions by King Koil, $802,831
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Stearns & Foster, $592,778
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Fashion Bed Group, $581,268
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United Sleep Products, $540,404
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Excel Bedding, $158,538
