Sofa Express owes Klaussner nearly $45 million
Part of debt secured by assets
Larry Thomas -- Furniture Today, December 18, 2007
NASHVILLE, Tenn. — Manufacturer and importer Klaussner Furniture, owner of the bankrupt Sofa Express retail chain, is owed nearly $45 million by the retailer for a series of loans, advances and letters of credit, according to documents filed in U.S. Bankruptcy Court here.
A sizeable portion of the debt, including $18 million in unsecured trade debt that was disclosed in earlier court filings, was incurred between Jan. 31 and Dec. 3, the day Sofa Express filed for Chapter 11 protection.
The additional money owed Klaussner was disclosed in filings related to the retailer’s emergency request for a debtor-in-possession (DIP) financing agreement with Wells Fargo Retail Finance, which the court approved.
According to the filings, the amount owed Klaussner consists of a pair of loans totaling $18.2 million, the $18 million in unsecured trade debt, and an additional $8.7 million in unsecured debt “with respect to various guarantees, letters of credit and other agreements.”
The loans are secured by various Sofa Express assets, including inventory and intangibles, but Klaussner has agreed to allow its interest to be included in the security for the new DIP loan.
Last week, U.S. Bankruptcy Judge Keith Lundin approved an interim financing agreement that allows Sofa Express to borrow up to $2 million from Wells Fargo to keep its stores open. Wells Fargo also was a Sofa Express lender prior to the bankruptcy filing.
A bankruptcy auction for Sofa Express assets is set for Wednesday, and the court has scheduled a hearing for Friday to approve the sale.
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