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Hendricks Furniture's plan to emerge from Chapter 11 wins OK

Company will focus on Boyles stores in North Carolina

Clint Engel -- Furniture Today, January 21, 2010

CONOVER, N.C. — Hendricks Furniture Group said a court approved its plan to emerge from bankruptcy protection Wednesday, and that the company will focus on its five remaining North Carolina stores.

The Conover-based parent of Boyles Furniture & Rugs and affiliated companies, which filed for Chapter 11 in June, said the plan already has received the nod from 98% creditors. Hendricks should emerge from bankruptcy protection over the next few months, officials said.

The payout on claims to unsecured creditors will vary based on what they elected, according to the plan. Some opted for a two-payment near-term distribution of $1 million over the next two years that will total 20% of their claims. Other creditors elected into a seven-year program that would pay back no less than 32.5% and up to 100% of their valid claim.

BB&T, which provided debtor-in-possession financing, is providing HFG with financing going forward, too.

"Just seven months after its voluntary filing, the company has improved its capital structure and significantly reduced debts and lease obligations associated with its failed single-line and specialty furniture stores," the retailer said in a release.

"We're grateful to be emerging from this difficult but necessary process," said HFG President Chad Hendricks. "Our company would not have survived without the patience and loyalty of our customers, the commitment of our employees and the support of our industry partners."

The upscale company said its reorganization process, which was managed by its executives and a committee of the company's financial advisors and manufacturing partners, has refocused HFG on its profitable Boyles stores in North Carolina - two in Hickory and one each in High Point, Mocksville and Charlotte. They've operated without interruption "and will soon reflect new products and merchandising made possible by the company's stabilized financials and renewed credit facilities with key financial partners," HFG said.

HFG also operates rug importer and distributor Naja Rugs. A sister company, Classic Moving and Storage, also is based in Conover.

In early court documents, the company said it was a victim of overexpansion -including its failed move into dedicated Drexel Heritage and Thomasville stores (since closed or sold off) - and the economic collapse.

In a disclosure statement connected to the reorganization plan, HFG said had estimated net sales last year of $41.1 million, and projected nearly $40 million in sales this year. Hendricks was No. 46 on last year's Top 100, ending 2008 with a dozen stores and estimated sales of $140 million.

It projected a net loss before taxes in 2009 of about $24 million and expects to rebound to a nearly $2.9 million profit before taxes this year.

The document also noted the proposed going-forward annual salaries of key executives under the plan: Larry Hendricks, chairman and manager, $100,000; Chad Hendricks, $175,000 and Jane Hendricks, secretary, $100,000.

"On behalf of our family and our executive team, I would like to thank our customers, partners and vendors for standing by us during this difficult time," Chad Hendricks said.

He added that the company will be embarking "on a new path, refocused on being America's retail leader for well-styled, well-priced home furnishings - and on creating sustainable value for our employees, community and stakeholders."

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