Thornwood seeking to restructure debt under Chapter 11
Company hopes to emerge within six months
Heath E Combs -- Furniture Today, June 16, 2010
PHOENIX — Thornwood Furniture Mfg. officials say the wood furniture manufacturer filed for Chapter 11 bankruptcy protection last week in order to seek longer terms for its debt, and say that the company is financially stable.
Craig Thorn, majority owner of the company, said he hopes to emerge from bankruptcy in three to six months.
Thorn said the company retains 250 manufacturing employees - in keeping with its typically lean staffing for the summer months - and is continuing to develop new product and deliver goods.
Thornwood's principal lender is Marshall and Isley, or M&I Bank. It owes the bank about $12.6 million, including $6.7 million in notes that matured and became payable in March.
Thorn said the company filed for Chapter 11 protection primarily to restructure the debt with longer terms. He said the value of Thornwood is about 2.2 times the debt it owes to M&I.
"I frankly think that operating companies that have more than twice the value of their debt are relatively prudent today in the market," Thorn said.
M&I Bank has struggled since the onset of the recession, taking about $1.7 billion in government assistance as its stock value plummeted from about $49 per share in April 2007 to about $8 recently. It lost $141 million in this year's first quarter.
Bruce Frenzel, Thornwood vice president of marketing and sales, said the manufacturer entered Chapter 11 "really to protect our business against the banking meltdown."
Thornwood has a 450,000-square-foot manufacturing and warehouse facility on a 22-acre campus here.
Thorn said the company began operating in 1987 with less than $1 million in sales and a handful of workers, but by 2004 was generating $60 million in annual sales with a workforce of 850. In 2007, Thornwood expanded into commercial furniture.
Sales for the most recent year were not available.
In its Chapter 11 filing, the company applied for joint administration of its case through Thornwood and Albacore Holdings, which owns the property on which Thornwood operates. Craig Thorn is a controlling officer in each business. Albacore's other owners and officers are Scott Thorn, Jeff Woods and Bob Lubold.
Craig Thorn said in a court document that until the recent economic downturn and housing marketing collapse, Thornwood was profitable. From 1996 through 2005, he said, it had net operating income of $34 million dollars on sales of $500 million.
He said the businesses remain solvent and that the company has stabilized its business operations and developed new strategies to accommodate market conditions.
In addition to its manufacturing operations, the company has a retail business called Maddies on Madison, a 50,000 square foot weekends-only furniture factory outlet store located in a warehouse space on its property.
The company's largest unsecured creditors include Packsize Corp., with a claim of $465,824; Roseburg Forest Products, $296,859; Banks Hardwoods, $145,066; IVC Industrial Coatings, $123,038; Swift Transportation, $114,641; Columbia Forest Products, $106,652; Akzo Nobel Coatings, $93,962; U.S. Industrial Fasteners, $93,765.
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UPDATE: Thornwood Furniture Mfg. in Chapter 11
Jun 10, 2010
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