American Home in Ch. 11
Will close 8 stores in Arizona, N.M.
By Thomas Russell -- Furniture Today, November 10, 2008
ALBUQUERQUE, N.M. — Top 100 company American Home has filed for Chapter 11 bankruptcy protection and plans to close eight of its 11 stores in Arizona and New Mexico as part of a plan to restructure.
The Albuquerque-based retailer listed details of the restructuring in a petition filed in U.S. Bankruptcy Court in the Los Angeles District of California.
Six of the locations slated to close are in Arizona and two are warehouse stores in New Mexico. A hearing will be held Thursday seeking approval to hold going-out-of-business sales conducted by Planned Furniture Promotions at the Arizona stores starting Nov. 15. The retailer also plans to hold store closing sales at the New Mexico locations.
The three stores it plans to keep open are in Santa Fe, Farmington and Albuquerque, N.M.
The GOB sales could run for up to 150 days, said Jerry Cohen, attorney with Cohen Tauber in New York, which represents PFP. Under the terms of the deal, PFP would pay 75 cents on the dollar for the inventory in the Arizona stores and also would pay an additional $250,000 as an augment fee to bring in additional merchandise for the sales.
Cohen added that $350,000 would be set aside for PFP to fulfill existing customer orders for goods not already in stock.
Formed in 1936, the Albuquerque-based company primarily sells at medium price points. Furniture and bedding represented about 85% of its estimated $119 million in sales for the fiscal year ended Jan. 26, 2008, according to a declaration filed by CEO Kenton Van Harten.
American Home was listed at No. 61 on Furniture/Today's Top 100 Furniture Stores. It is a division of AFC Acquisition Corp., which has three primary shareholders — Hancock Park Capital III, which has 67.5% equity, Hancock Park Capital II, which has 22.5% equity, and American Home Vice Chairman Lee Blaugrund, who has the remaining 10%.
Its 11 locations cover 550,000 square feet and include nine American Home stores and two warehouse stores called American Home Warehouse Plus.
AFC Acquisition Corp. President and CEO Van Harten was not available for comment last week. In his court declaration, however, he said, that in September, Wells Fargo Retail Finance terminated AFC's revolving credit facility. That created a liquidity crisis that prevented the company from funding operations, although Wells Fargo and Hancock Park Capital II and III did make some subsequent loans.
Van Harten added that the company also had expensive leases at some Arizona locations that kept it from being profitable. He also attributed the financial difficulties to a weak economy and sales declines.
Industry companies listed among the top 20 unsecured creditors of American Home, and the amounts they are owed, include:
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Simmons, $659,258
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Lane Furniture Inds., $621,149
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Sealy, $334,096
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Aspen Furniture, $199,847
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Hillcraft Furniture, $183,946
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Barcalounger-Import, $178,355
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Guildcraft Upholstery, $159,210
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Flexsteel Inds., $154,085
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BJI International, $153,140
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American Furniture Mfg., $141,605
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Artexport, $136,898
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Canyon Furniture Import, $129,656
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Thornwood Furniture Mfg., $128,360
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Wynwood, $124,743
Senior Retail Editor Clint Engel contributed to this story.
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