Sofa Express gets bids
Liquidators pay $12.9M for rights
By Heath E. Combs and Larry Thomas -- Furniture Today, December 23, 2007
Nashville, Tenn. — A group of bidders, including Hilco, SB Capital and Planned Furniture Promotions, won rights to the Sofa Express liquidation, including fixed assets, inventory and leasing rights, at a bankruptcy hearing here last week.
HRE Holdings, Tiger Capital Group and Kimco Realty Services were also part of the group that placed the winning bid. The group paid $12.9 million for liquidation rights to Sofa Express, according to a source involved in the hearings.
That liquidation includes inventory with a cost value of $14.7 million and leases for 42 locations, a source said. Sofa Express has the right to sell two company-owned properties.
Sofa Express, owned by manufacturer and importer Klaussner Furniture, filed for Chapter 11 bankruptcy protection Dec. 6 after two years of mounting expenses that surpassed revenues in a weak retail market.
Bidding at last week's bankruptcy court auction was done by three groups. Other bidders included a joint venture between Great American Group, Hudson Capital and Julius M. Feinblum Real Estate, and stalking horse bidder Gordon Bros. and DJM Realty. Negotiations started last Wednesday and lasted until about 4:15 a.m. Thursday, said a source involved in the talks.
The hearing was pending court approval on Dec. 21. The liquidation sale was expected to start Dec. 22 and to continue until April.
Meanwhile, documents in U.S. Bankruptcy Court in the Middle District of Tennessee here also showed that Klaussner is owed nearly $45 million by the retailer for a series of loans, advances and letters of credit. A sizable 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. 6.
The additional money owed Klaussner was disclosed in filings related to the retailer's emergency request for a debtor-in-possession, or 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.
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.
