• Clint Engel

Court sets RoomStore asset auction for June 25

RICHMOND, Va. — U.S. Bankruptcy Court here has approved RoomStore's plans for an auction later this month to sell its remaining RoomStore assets, with a few exceptions.

It's part of an overall reorganization plan that calls for the eventual selloff of all assets of the Richmond-based Top 100 company and an unusually high distribution to unsecured creditors of up to 80 cents on the dollar.

RoomStore filed for Chapter 11 bankruptcy protection in December, requested an auction on June 25 for the sale of leases, inventory and the right to conduct going-out-of-business sales. Bids are due June 19 under the court-approved plan.

Among the assets excluded from the auction would be the company's Rocky Mount, N.C. distribution center, its 65% ownership stake in Mattress Discounters, Creative Distribution Services real estate buying and holding company, and the RoomStore customer lists and data.

RoomStore said it wants to sell the assets as a package or in various lots.

"Upon the consummation of the sales(s) contemplated ... the debtor will no longer operate as a retail furniture store chain," RoomStore said in the court document. Instead, it will operate "in a reduced manner" from its Richmond headquarters, providing back office services for Mattress Discounters "while winding down its business affairs and sell its remaining assets ... in due course."

The move follows two earlier attempts by the economy-battered retailer to trim assets to core operations in an effort to survive. The company confirmed earlier that the 28 remaining RoomStore locations were on the block.

Julius M. Feinblum Real Estate, of Plainview, N.Y., is marketing the remaining locations - 11 stores in Maryland, 10 in Virginia, five in North Carolina and two in South Carolina.

In a disclosure statement filed with the court, RoomStore estimated the cost value of its inventory at about $10.4 million as of June 1, and estimated it will recover about $7.8 million to $10 million through the sale. That's in addition to $1.8 million to $10 million from the pending sale of real estate leases and related intellectual property right.

Among other things, RoomStore valued its Mattress Discounters interest at between $7.8 million and $19.5 million and its Rocky Mount Distribution Center at $4 million to $5.5 million.

Based on the ultimate sales of its remaining assets, the retailer said it anticipated paying secured, administrative and priority claims is full as well as "unsecured claims up to an amount equal to 100%" off allowed claim amounts, without interest and less a "tax attribute benefit" capped at 20% of the allowed claims.

A hearing on the disclosure statement is scheduled for June 24.

Clint EngelClint Engel | Senior Retail Editor, Furniture Today
cengel@furnituretoday.com

Please feel free to email or call me with all of your retail news and tips, including expansion news, successful merchandising and marketing strategies and anything else you would like to see covered by Furniture/Today.  Contact me directly at cengel@furnituretoday.com or 336-605-1129.

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