American of Martinsville, Barcalounger file Chapter 11
By Larry Thomas -- Furniture Today, May 24, 2010
WILMINGTON, Del. —
Upholstery producer Barcalounger and its sister company, contract furniture source American of Martinsville, have filed for Chapter 11 bankruptcy protection.
The joint filings, made a little more than a month after the two companies shut down their factory in Martinsville, Va., said parent company Hancock Park Capital already has agreed to sell the companies to another affiliate of Hancock for $1.5 million.
The sale would have to be approved by the bankruptcy court, which would conduct an auction if any other bidders surface.
According to documents filed by newly appointed Chief Restructuring Officer John Chapman, the companies “have experienced significantly lower than anticipated operating profits” the past two years.
“Due to the downturn in the economy and furniture sales in general, the debtors have been unable to maintain adequate profits to continue as a going concern,” Chapman's statement read.
Hancock Park is the largest unsecured creditor with claims totaling $32.4 million. However, the firm said it will waive its claim if the sale to its affiliate is approved.
The companies jointly filed a list of their 30 largest unsecured creditors. After Hancock Park, the largest unsecured claim is from logistics provider Globe Express Services, which is owed $619,000.
Other key unsecured creditors, and the amounts owed, include foam supplier Carpenter Co., $139,557; leather supplier Moore & Giles, $123,151; leather supplier Leather Miracles, $105,260; packaging supplier Multi-Wall, $75,367; leather supplier Carroll Leather, $58,104; leather supplier Zenda Leather, $53,965; and mechanism producer Ultra-Mek, $48,772.
Hancock Park acquired Barcalounger in 2005 and purchased American of Martinsville from La-Z-Boy in 2006. The investment firm shut down Barcalounger's factory in Rocky Mount, N.C., a year ago and moved production to the AOM plant.
The factory was closed without warning April 16.
Chapman said creditors who have questions about the bankruptcy proceeding may call (276) 634-2997.
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