Rhodes, Levitz failures contribute to Collezione Europa’s Chapter 11 filing
Sales decline from $120 million in 2004 to $74 million in 2007
Larry Thomas and Jay McIntosh -- Furniture Today, March 4, 2008
NEWARK, N.J. — Collezione Europa said in documents filed in U.S. Bankruptcy Court here that its sales fell sharply in the past three years, partly because of the failures of two of its biggest retail customers, Rhodes and Levitz.
The furniture importer filed for Chapter 11 bankruptcy protection Friday, saying it owed more than $5.2 million in debt to its largest unsecured creditors.
In court documents, the company said its sales declined from about $120 million in 2004 to $74 million in 2007. It blamed the rapid drop partly on the bankruptcies of two key customers, Atlanta-based Rhodes Furniture and New York-based Levitz.
Collezione said it had a net loss of about $7 million last year and that its lender has declared it in default of a covenant on its revolving credit loan.
The bankruptcy filing also includes two affiliated companies, Kelly Road Warehouse and 145 Cedar Lane Associates, both of which lease office and warehouse space to Collezione Europa. All three companies are owned by brothers Leonard and Paul Frankel.
In first-day motions before the bankruptcy court, Collezione has asked for permission to pay wages, bills and other expenses to continue to operate the business. A hearing on the motions is set for Wednesday.
Paul Frankel, vice president of Collezione Europa, said in a declaration to the bankruptcy court that Rhodes had been the company’s largest customer when the retailer closed in summer 2005. “In addition to the loss of the customer and repeat business, Collezione was forced to take delivery of cancelled purchase orders and store those goods in its warehouse,” Frankel said.
Then last November, it lost another big customer in Levitz, taking a $3 million credit loss.
“Operating costs have not been reduced enough to compensate for the decline in sales volume in this challenging time for the entire furniture industry,” Frankel said.
Most of Collezione’s largest creditors are furniture manufacturers in China and Vietnam. Several trucking companies also made the list.
According to court documents, the largest unsecured creditor is B&L Inds., which is owed $3.74 million. Court papers did not indicate the nature of B&L’s business, although it does share a Fort Lauderdale, Fla., address with another creditor, Bernard Frankel, who is owed $41,268.
The next largest unsecured creditor is Vietnamese furniture producer Capital Ocean International Co. Ltd./Vietnam Fact Kaiser Furniture Co. Ltd., which is owed $354,813.
Others listed among the top 20 unsecured creditors include:
Bencini Realty Limited Partnership, High Point, $199,750
Leefu Wood Products, Hong Kong, $155,075
Starwood Furniture Mfg. Co. Ltd., Haikou, China, $147,703
Leefu (Kingford) Wood Products, Vietnam, $102,957
Well-Known Homeart Enterprise Co. Ltd., Vietnam, $100,682
SAICG-Shanhai, Shuqiang Furniture Co., Shanghai, China, $88,882
Life Style Furniture, Okolona, Miss., $79,865
Densing Furniture Development Ltd., Hong Kong, $69,523
Heslin Rothenberg, Albany, N.Y., $62,239
Anderson Design Group, High Point, $27,884
Caldwell Freight Lines, Lenoir, N.C., $27,371
Watkins & Shepard Trucking, Missoula, Mont., $27,723
Foothills Trucking, Conover, N.C., $16,562
James C. Frenzel, Atlanta, $15,284
Sunbelt Furniture Express, Hickory, N.C., $12,965
Kai Lee Arts & Furniture Factory, Kwangtung, China, $12,468
Parsons Trucking, Houston, $12,341
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Collezione Europa files Chapter 11
Mar 4, 2008
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