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Weak sales, lending squeeze led to Linder's liquidation

Clint Engel -- Furniture Today, November 28, 2011

GARDEN GROVE, Calif. - Linder's Furniture will close its doors for good following a going-out-of-business sale that began earlier this month, citing a lending squeeze and a weak business climate that never rebounded.
     The company, based here, said the sale of more than $20 million worth of inventory is taking place at all 11 Southern California locations, including its higher-end Legacy Furniture store in Rancho Mirage, Calif. The sales are managed by a joint venture between liquidators Gordon Bros. Group and APJL Consulting.
     "Considering the holiday season has just started, we expect this be a very short sale, and popular items will sell out fast," said Craig Venezia, Gordon Bros. spokesman.
     Linder's founder and CEO Phil Linder said he's hoping the liquidation generates about $25 million in sales so that vendors have "a chance of getting something back and I don't have to throw more into the pot" to pay off lender Marquette Bank.
     Linder said he is by far the largest creditor, owed more than $4 million. He would not disclose how much is owed to industry suppliers or the bank.
     Linder's entered into an alternative to bankruptcy called a "general assignment for the benefit of creditors" on Nov. 2.
     Phil Linder said "things started getting a little shaky" in 2007, after the retailer took on debt to acquire Legacy Home Furnishings in Cathedral City, Calif., and as competition heated up with the likes of Living Spaces, Ashley Furniture HomeStores and Mathis Bros. moving into the market.
     "We kind of became the little player in town," he said. "We were in the middle of a furniture war, and they had all the nuclear bombs."
     Linder's worked to cut its expenses to match weakening sales as the housing market collapsed and unemployment rose, but it couldn't move fast enough, he said. At the same time, its bank was putting on pressure, saying Phil Linder had to put in more of his own money in order for the company to continue lending. Also, credit card companies began requiring a huge cash reserve to cover possible losses, hurting Linder's cash flow.
     "It's like you're caught in a vise between banks and credit card companies," he said. "You're just being squeezed."
He said the retailer did have great support from most suppliers, who extended terms when times got tough.
     Company President Eric Foucrier said that assignment for the benefit of creditors is a money-saving alternative to bankruptcy, and given market conditions, he expects the industry will see it used a lot more often in the future.
     Foucrier said his job right now is to help employees through the transition, and he will look "to maximize the sale for unsecured creditors." After that, he said he's planning to remain in the industry and will look at opportunities on both the retail and supply sides.
     Linder's was No. 81 on Furniture/Today's Top 100 with estimated 2010 furniture, bedding and accessories sales of $60.1 million at its 11 Southern California stores, but Linder said earlier this month that the company's total sales were much less that that - about $39 million.
     Among its key vendors were Legacy Classic, Fine Furniture Design, Sealy, Universal and Wynwood.

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UPDATE: Linder's Furniture to close following going-out-of-business sale

Nov 16, 2011

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