Carl's Patio auction scheduled for March 1
Clint Engel -- Furniture Today, February 8, 2013
BOCA RATON, Fla. — Despite reports that new ownership is acquiring the bankrupt Carl's Patio, it's not a done deal yet.
According to U.S. Bankruptcy Court records, an auction for the business will be held March 1, and bids are due on or before Feb. 28.
Late last month, Carl's Patio said in a release that an ownership group signed a purchase agreement to acquire and expand the Florida outdoor home furnishings retailer. It noted the group is led by Paul Otowchits, the retailer's chief operating officer, who would be named president, "with investment support from Weinberg Capital Group of Cleveland."
It said the acquirer will continue to use the Carl's Patio name. The press release, however, did not mention that Carl's Patio had filed for Chapter 11 bankruptcy filing in Delaware on Jan. 21.
Asked later why Carl's Patio didn't mention the bankruptcy filing, Otowchits told Furniture/Today that its original press release did include information "about that and the restructuring," but on the advice of its attorney, the retailer decided to focus on the purchase agreement.
"We have substantial amount of money in place and we are the stalking horse bidder," he said. "We're really close to getting that done."
Otowchits said the investor group also is guaranteeing all customer deposits, adding, "We're trying to protect the customer through this."
According to court documents, Otowchits is an investor in the group making the stalking horse bid for the retailer - valued at about $4.2 million and including the assumption of certain liabilities. Other bids would have to be at least $145,000 higher than the stalking horse bid to be considered.
The papers also show that WBG Partners V acquired Carl's Patio from Carls Furniture in 2008. WBG is partially owned by Ronald Weinberg and Daniel Bell of Weinberg & Bell Group. Weinberg Capital is an affiliate of Weinberg & Bell, according to court documents. And Carl's Patio Acquisition - the official name of the stalking horse bidder - is an affiliate of Weinberg Capital, tying some current owners to the future owner of Carl's Patio, should the stalking horse bid prove successful.
According to court records, Carl's Patio operates 10 stores and a warehouse. Records show top unsecured creditors and claims include outdoor furniture manufacturers Woodard, $2.16 million; Woodard Landgrave, $440,669; Lloyd Flanders, $444,746; Les Jardins, $106,123; Agio, $83,827; Brown Jordan, $82,311; Rogers Cushions, $62,718; Galtech, $53,865; Gloster, $51,588, and Century Patio, $45,347.
In a court declaration, the retailer cited several reasons for the filing including the economic downturn, increased competition, unsuccessful strategic initiatives and "increased fixed costs through store expansion that raised the breakeven level of the company and constricted flexibility in cost saving initiatives in response to demand factors."
Otowchits was quoted earlier by the Fort Lauderdale, (Fla.) Sun Sentinel, saying, "The new ownership group is the one who is purchasing the company out of bankruptcy. We are confident (the bankruptcy proceedings) will happen pretty quickly and we want to get through it."
For more on the January report, see a story in Furniture/Today sister publication Casual Living.
In September, Furniture/Today reported that Carl's Patio was exiting California, where business remained tough, and planned to focus on its core Florida operations, where Otowchits said business appeared to have leveled off. He said the company planned to expand in Florida, where it operated 12 stores at the time.
Industry Related Content
Furniture Today's Ray Allegrezza Speaks with Stephen Bogart about Fine Furniture's New Bogart Line