Levitz liquidation sales begin
By Clint Engel -- Furniture Today, December 9, 2007
New York — U.S. Bankruptcy Court here has approved the sale of Levitz Furniture assets to the highest bidder at last month's auction, clearing the way for liquidation and the end of the Levitz stores.
By late last week, the sales were under way at all 76 stores in Arizona, California, Nevada, New Jersey, New York, Oregon, Pennsylvania and Washington.
Court approval of the sale also sets up Raymour & Flanigan's big expansion in the New York metro market. The Top 100 retailer, which has 13 stores in the New York area now, took part in the bankruptcy bid and secured the right to take as many as 18 Levitz leases.
Ashley also took part in the bid and said it is evaluating all 46 Levitz stores in the West for its Ashley Furniture HomeStores dedicated network.
The winning bid, estimated to be worth $57.6 million, was led by Hilco Merchant Resources. It was joined by HRE Holdings (a Hilco unit), Tiger Capital, SB Capital, Planned Furniture Promotions, Kimco Realty, YA Global Investments, Raymour and Ashley.
Hilco, Tiger and SB Capital are managing the closing sales. HRE and Kimco are managing the real estate disposition.
A news release from Hilco said the liquidation will include $165 million of furniture and accessories inventory that will be discounted 20% to 50%. Hilco Executive Vice President Richard Kaye said the sales will run for an estimated eight to 12 weeks. He would not say how much they are expected to generate.
Attorneys representing Levitz's unsecured creditors committee said that, along with the sale to the Hilco group, the court set up a trust for unsecured creditors. But it's too early to say how much suppliers and other unsecured creditors will get back, said Doug Jermyn, chairman of the committee and credit manager at Legacy Classic. That will depend on the result of the upcoming liquidation sales and other factors, he said.
Levitz owes its top industry creditors about $25 million, according to bankruptcy court documents.
Jay Indyke, an attorney representing the committee, said the minimum amount of funding in the trust for the unsecured creditors is $500,000, and added that the committee has negotiated settlements that could lead to more. YA Global, which made a $22 million investment in Levitz before the filing, will not be lumped in with unsecured creditors.
The court also gave YA Global the right to pursue claims against Levitz insiders, such as officers and directors. Unsecured creditors would share in any proceeds resulting from those efforts, Indyke said.
Ashley Chairman Ron Wanek said his company is evaluating all Levitz stores in the West, including 32 in California, four in greater Phoenix, three in greater Las Vegas, five in western Washington and two in the Portland, Ore., market. He said the company probably will take several weeks to evaluate the stores before deciding which ones to take.
While Ashley is looking primarily for licensees of its HomeStores network, some of the former Levitz stores could become corporate-owned HomeStores, he said.
| Acknowledgements | ||
| Senior Editor Gary Evans contributed to this story. | ||
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