Robb & Stucky in Ch. 11
March 7 Auction to Decide its Fate
Clint Engel -- Furniture Today, March 4, 2011
TAMPA, Fla. - The fate of high-end retailer Robb & Stucky may ride on the outcome of a March 7 bankruptcy court auction as the Top 100 company continues to pursue going-concern investors who can top an existing stalking horse liquidation bid.
The Fort Myers, Fla.- based chain, with 12 fullline showrooms, seven patio stores and an outlet, filed for Chapter 11 bankruptcy protection Feb. 18 after years of struggling in some of the hardest hit housing markets in the country.
Court documents show its secured creditors are owed about $43.8 million, led by a Bank of America with a $21.2 million claim.
Fourteen of the retailer's 20 largest unsecured creditors are home furnishings companies owed about $8 million. The largest is Woodard, a casual and outdoor furniture vendor that is owed $1.13 million. High-end case goods and upholstery resource Marge Carson is owed $1.05 million.
Other industry suppliers among the largest unsecured creditors are E.J. Victor, owed $719,391; Lexington Home Brands, $656,667; Schnadig; $590,367; Hancock & Moore, $548,388; John Richard Collection, $538,013; Stanley, $477,401; Henredon, $426,994; E.S. Kluft, $407,229; Brown Jordan, $383,890; Leather Trend, $350,713; Vanguard Furniture, $350,028; and Century, $330,719.
All told, Robb & Stucky's unsecured creditor claims total about $63 million, according to one court document.
While the retailer is working on a plan to stay in business in a scaled-down form, it may be forced into liquidation. Last week, the court authorized the company to enter into a stalking horse bidder arrangement with Hudson Capital and Hyperams to serve as agents to liquidate substantially all assets. Under the deal, Hudson and Hyperams would pay 75.2% of the inventory value.
John Young, senior managing director of consultant and turnaround specialist Conway Mackenzie in Houston, told Furniture/Today that he estimates the retailer's inventory would bring in about $31.5 million to the estate under the agreement. According to a local news report, an attorney for Robb & Stucky told the court last week that the sale of inventory would likely raise $31million to $34 million.
That deal is subject to a better offer. If a higher bid is accepted at the March 7 auction, the stalking horse bidder would receive a $475,000 break-up fee approved by the court.
"We are endeavoring to locate a buyer that will maintain the company's brand standards, associates team and strong focus on customer needs and service, with minimal impact on operations and stakeholders," Dan Lubner, president of Robb & Stucky's Hospitality Design Division, said in a statement following the initial filing.
A spokesman for the retailer said the store's "doors are open as we navigate this process. We will continue working for the next few weeks to secure an enterprise buyer that will maintain our strong brand, management team and operations."
Separately, Robb & Stucky filed a notice with the state of Florida last week that it plans to lay off 178 employees at its Fort Myers corporate headquarters by April 23.
In court documents, the retailer - one of the industry's few remaining high-end players operating in multiple markets - painted a picture of mounting debt and weakening sales since the economic downturn began in 2007.
A declaration by Chief Restructuring Officer Kevin Regan noted that the downturn sharply slowed construction of new homes and second home purchases, and that "the national trend toward declining purchases of highend furniture goods and use of interior design services has significantly harmed and adversely impacted the debtor's business."
He also noted that the states where Robb & Stucky aggressively expanded - Florida, Texas, Arizona and Nevada - were among the hardest hit.
Robb & Stucky is No. 33 on Furniture/Today's Top 100 with 2009 estimated sales of $201 million at 20 stores. That was down nearly 21% from the year before, when the company had 26 stores.
According to a court document, the retailer's revenue for its fiscal year ended June 30, 2010, was $139.7 million, down nearly 50% from the peak revenues of $273.7 million for the fiscal year ended in June 2006.
In October 2010, Robb & Stucky obtained its most recent round of $3.5 million in financing from Collier Enterprises - shown as CIRS Financing in court documents - and as part of the deal, brought in FTI Consulting and FTI's Regan. His previous industry experience includes advising the now-defunct Breuners Home Furnishings, Levitz and Storehouse chains.
Court documents show Regan started with Robb & Stucky in October at $25,000 per week. Robb & Stucky has paid FTI a total of $647,615 since early December.
-
High-end retailer Robb & Stucky in Chapter 11
Feb 21, 2011
VIEW ALL GALLERIES
