Wickes price nearly $17 million
Real estate to be auctioned later
Clint Engel -- Furniture Today, February 29, 2008
WHEELING, Ill. — A U.S. Bankruptcy Court approved the liquidation plan for Wickes Furniture Thursday, signaling the beginning of the end for the Top 100 company.
A group of liquidators is paying nearly $17 million as the highest bidder for the inventory and rights to run the going-out-of-business sales, which will begin Saturday.
The winning bidders were Hilco Merchant Resources, SB Capital, Tiger Capital and Planned Furniture Promotions, confirmed Roy Hester, vice president of sales for Planned Furniture Promotions.
Wickes announced that the sales will start Saturday at the company’s 38 stores in California, Illinois, Indiana and Nevada, and will start later in March at five stores in the Portland, Ore., area. The sales can run through June 30 in Portland and through April 30 in Wickes’ other markets, according to the agreement.
“The (sales) groups are eager to maintain as many qualified Wickes employees as possible throughout the course of the sales,” said Jerry Cohen, an attorney representing PFP.
Sources said the Hilco-led group is to pay 50.25% of the cost of Wickes’ inventory, which is valued at about $33 million, as well as $360,000 for the right to augment the sale with additional stock. That would put the price tag at about $16.9 million.
After reaching a certain level of profit, the liquidators would share any additional profits with the estate, Cohen said.
Wickes’ real estate was not included in the sale. The bidding process on the real property is expected to begin in the next week or so, said Doug Jermyn, co-chairman of Wickes’ unsecured creditors committee and credit manager at Legacy Classic Furniture.
Jermyn said the committee is pleased that the real estate portion will be handled separately “to hopefully maximize the value of the estate and the return for the unsecured creditors.”
Wickes, which operates 43 stores in greater Chicago, Los Angeles, Las Vegas and Portland, Ore., filed for Chapter 11 bankruptcy protection Feb. 3 after a failed attempt to get suppliers to defer past-due debt payments and after parent Sun Capital Partners cut off funding.
It is the second retailer owned by Sun Capital to fail this year. One of the private equity firm’s earliest industry investments, Norcross, Ga.-based Nationwide Mattress and Furniture Warehouse, went into liquidation earlier this month after Sun pulled its funding there, sources have said.
At the time of its filing, Wickes owed more than $23 million to its top industry creditors, and the credit sources some of them were using, according to court records.
Separately, a former Wickes employee is suing the chain, saying it violated the law when she was terminated without proper notice.
The class action suit brought by Ramona Ahumada seeks damages in the amount of 60 days pay and benefits for herself and other former employees, alleging Wickes violated their rights under the Worker Adjustment Retraining Notification Act (WARN).
According to the suit, Ahumada worked for Wickes in Rancho Cucamonga, Calif., until her termination on Feb. 4 or 5, which was part of a “mass layoff and/or plant closing” as defined by the WARN Act. She did not receive the 60 days advance written notice of termination required under WARN, the suit said.
Wickes discharged about 400 other employees, who are included in the class, the suit said. It seeks recognition of the unpaid wages and other pay and benefits as an administrative priority claim over unsecured creditors.
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Wickes liquidation set
Mar 2, 2008
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