Bankrupt Linwood Furniture aims to sell assets
July 12, 2012-- Furniture Today,
WINSTON-SALEM, N.C. — Citing an inability to generate enough cash to operate until it can reorganize, case goods manufacturer Linwood Furniture is seeking bankruptcy court approval here to sell most of its assets.
Linwood, which filed for Chapter 11 bankruptcy protection in March, said in court documents it had not generated enough cash to turn around or operate until a plan of reorganization could be confirmed.
The documents added that by August, it expects to run out of cash to continue operations.
While it has a large backlog of open orders, the company hasn't been able to generate positive cash flow under its new business model, primarily due to delays in receipt of materials and completion of finished goods.
The company aims to sell its inventory - excluding some goods in which hospitality maker Kimball International has an interest - along with operating concepts, designs, trademarks and the name Linwood Furniture, among other tangible and intangible assets.
Bank of the Carolinas also has a priority claim to certain planer, gluer, router and sanding equipment.
Linwood is seeking approval to sell its assets at auction on Aug. 6 and is seeking a minimum bid of about $2.56 million, unless a lower offer can be negotiated with D&S Legacy Vision, a creditor owed $2.64 million.
Company officials were unavailable for comment on Thursday.
Linwood opened in 2006 to keep production of North Carolina artist Bob Timberlake's licensed furniture in the United States. But Century Furniture has since taken over the Timberlake license.
Linwood said its bankruptcy filing was prompted in part the company's effort last year to focus on being an OEM manufacturer for hospitality furniture companies. Officials said that was a high volume but low margin business model.
In its original Chapter 11 filing, the company listed about $3.7 million in assets and $6.9 million in debt.
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