Rockaway selling units
Will exit all but about 50 stores
By Clint Engel -- Furniture Today, May 7, 2007
Randolph, N.J. — Rockaway Bedding is set to become a shell of its former self, with the Top 100 chain looking to close or sell all but about 50 stores in New Jersey and Delaware.
The company, which filed for Chapter 11 bankruptcy protection April 9, has asked the court for permission to hire Hilco Merchant Resources to run going-out-of-business sales, liquidating about $4.25 million in goods at 121 out of roughly 180 stores.
It appears to be planning a complete or near-complete exit from New York — where it has about 55 stores — as well as Pennsylvania, Connecticut, Maryland and Virginia.
If the court approves, Rockaway also would liquidate 12 of its New Jersey stores. That would leave it with about 50 stores, primarily in New Jersey, but also nine in Delaware if its Web site store count is correct. Hilco also would be responsible for disposing of the leases.
Upper Marlboro, Md.-based Mattress Discounters has bid $1.7 million for 18 stores in Maryland and Virginia, and for inventory and certain assets from seven other locations, according to court documents.
Furniture/Today estimates Randolph, N.J.-based Rockaway had sales of about $143 million at 185 stores last year.
Rockaway has been looking to cut overhead and downsize "by divesting themselves of unprofitable, underperforming stores, and selling the related inventory and fixtures," the Top 100 company said in a court filing.
Mattress Discounters is bidding on leases, inventory and other items at 12 stores in Maryland and six stores in Virginia, including locations in Gainesville and Herndon, Va., that Rockaway has yet to open.
The bid also is for inventory from seven other stores in the greater Washington-Baltimore market.
According to the terms, the purchase price is $1.7 million. Mattress Discounters would be entitled to a break-up fee of $100,000 if the deal is terminated for any reason other than a material breach by Mattress Discounters.
A court hearing on bidding procedures for Rockaway's assets and the proposed sale to Mattress Discounters is scheduled for May 10. Mattress Discounters officials could not be reached for comment.
Rockaway owes its top nine industry creditors more than $8.4 million, according to its bankruptcy petition.
According to documents, Rockaway hired Saddle Brook, N.J.-based Capstone Advisory Group as a financial advisor before its bankruptcy filings. The firm, with experience helping troubled companies negotiate debtor-in-possession financing and make other reorganization moves, received $30,000 in compensation from Rockaway for services prior to the petition. Rockaway is seeking to retain the firm, court documents show.
The affidavit from Capstone's executive director, Ed Ordway, lists the firm's hourly rates: $525 to $650 for executive directors, $250 to $485 for staff, and $100 to $160 for support staff. Among its past industry clients are Levitz, Seaman's and Heilig-Meyers.
The U.S. trustee in the Rockaway case has filed a limited objection to the Capstone application, noting Capstone's pre-petition payment and referring to another court case that found proposed counsel for a debtor could not be retained until the court determined whether the counsel had received preferential payments. A hearing on the objection also is scheduled for May 10.
Capstone's Ordway could not be reached for this story. Rockaway CEO Tony Licastro has not returned calls.
