Dormia liquidation approved
By Clint Engel -- Furniture Today, July 13, 2008
BALTIMORE — U.S. Bankruptcy Court has approved the liquidation of the 20-store Dormia sleep chain, a move requested by the retailer after it failed to find a buyer.
Hudson Capital Partners is conducting the sale, which began July 3 and is expected to run for about 10 weeks, according to a Hudson Capital release. The inventory is valued at $4.3 million.
Hudson is paying the retailer 49.5% of the cost value of the inventory and possibly a percentage of proceeds from the sale, according to court documents. Dormia filed for Chapter 11 bankruptcy protection in June.
Dormia — with stores in Connecticut, Florida, Georgia, Indiana, Kentucky, New Jersey, New York, North Carolina and Ohio — is the retail arm of bedding manufacturer Classic Sleep Products, which is not affected by the filing, the company has said.
Dormia spokesman Stan Steinreich said that the liquidation doesn't necessarily mean the retail chain will shut down completely.
“The options are ongoing,” he said, noting that Dormia is in discussions with landlords about renegotiating leases to continue operating and is also talking to potential buyers of both the chain and individual locations.
A court document requesting the sale said Dormia struggled through 2007 and, under current market conditions and its debt load, was unable to turn around the business.
Market conditions for the industry across the country also “rendered the debtors unable to sell themselves as a going concern, despite significant efforts to do so,” the document said. “Mounting debt, a severe liquidity crisis, the inability to borrow and poor sales now require (Dormia) to liquidate their retail assets in a store closing scenario.”
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