Sealy, Lane lead list of Lack's Stores creditors
Texas furniture retailer files Chapter 11, as expected
Clint Engel -- Furniture Today, November 17, 2010
VICTORIA, Texas — As expected, Lack's Stores here filed for Chapter 11 bankruptcy protection Tuesday with plans to liquidate all 36 stores, although its lenders already have objected to the plan.
The Top 100 company listed assets and debts both in the $100 million to $500 million range, including some $86 million in owes to lenders financing customer accounts.
Sealy is listed as Lack's largest unsecured creditor, owed $3.05 million. Lane Furniture is the second largest, owed $2.8 million.
Other industry creditors include Corinthian, owed $363,921; Steve Silver, $229,132; Standard Furniture, $194,327; Global Link Logistics, $137,733; Najarian, $128,617; Oak Furniture West, $95,104; Legends Furniture, $93,588; Progressive Furniture, $84,871; Lifestyle Enterprise, $73,937; and Presidential, $73,410.
In comments to Furniture/Today and court documents, the credit-oriented, promotional to midpriced Lack's laid the blame for the bankruptcy move on its lenders and a credit squeeze. Despite the retailer's improving operations in 2009 and this year and its gradual pay down of the balance owed on its senior credit facility, the lenders would not refinance or restructure its obligations under terms that would allow it to continue operating, court documents say.
CIT Group/Business Credit, a lender and agent to other secured lenders to Lack's, including PNC Bank, and JPMorgan Chase Bank, has objected to Lack's court request to use cash collateral on the liquidation process, calling it "irresponsible." CIT requested that the court limit cash collateral use to two weeks at a time.
In an interview Monday, Lack's President and CEO Melvin Lack told Furniture/Today that the company has hired Hilco Merchant Resources to run the liquidation sale, which is expected to begin no later than Friday and run 45 to 75 days. He would not disclose how much money the sale is projected to raise.
Before the 2008 recession, Lack's annual sales exceeded $200 million in 39 stores and it employed 1,200 associates, the retailer said in the press release.
"After the recession began in 2008, the company experienced a 20% drop in sales and was forced to make dramatic cuts in expenses, including the termination of 300 of its associates," it said. Those efforts helped return the company to profitability and it continued to be profitable this year, the release said.
Lack's is No. 51 on Furniture/Today's Top 100 with 36 stores in central, southern and western Texas and estimated furniture, bedding and accessories sales of $101 million in 2009, down from an estimated $112 million the year before.
In a court documents the company, which sells furniture, electronics and appliances, said it has generated revenue of more than $122 million from all products so far this fiscal year beginning Feb. 1, and operating profit of more than $1 million.
Among the closing stores are five in San Antonio, three in Austin, two each in Corpus Christi, Victoria and Lubbock, and one each in Beeville, Sinton, Portland, Alice, Bay City, Clute, El Campo, Port Lavaca, New Braunfels, College Station, Midland, Odessa, Temple, Killeen, Waco, San Angelo, Abilene, Tyler, Lufkin, Del Rio, Uvalde and Longview, Texas.
Lack's Stores is a separate company from another Top 100 Texas store chain with a similar name, Lacks Valley Stores, based in Pharr.
Staff Writer Heath E. Combs contributed to this story.
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Lack's begin liquidation proceedings
Nov 19, 2010
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