Linwood Furniture plans asset sale to stay in business
Heath E. Combs -- Furniture Today, July 13, 2012
WINSTON-SALEM, N.C. — Officials with case goods manufacturer Linwood Furniture say that a sale in the next month of its assets could be the best way to exit Chapter 11 and continue as an ongoing entity.
Jeff Schwall, president of Linwood, which filed for Chapter 11 bankruptcy protection in March, said Thursday that the company is still producing its Linwood line of furniture, and also pieces for Century Furniture's Bob Timberlake licensed line, cases for Calvin Klein and custom dining for CR Home.
"We're going. We'd love to be building more furniture but we're building something every day down here," Schwall said. "I'm working real hard to keep producing furniture, keep my employees working."
In court documents filed earlier this week, Linwood sought bankruptcy court approval to sell tangible and intangible assets because it had not generated enough cash to turn around or operate until a plan of reorganization could be confirmed.
While it has a large backlog of open orders, the company said it hasn't been able to generate positive cash flow under its new business model, primarily due to delays in receipt of materials and completion of finished goods.
Linwood is seeking approval to sell its assets at auction on Aug. 6 and is seeking a minimum bid of about $2.56 million, unless another offer can be negotiated with D&S Legacy Vision, a creditor owed $2.64 million.
Schwall said the company has had interest from buyers.
"It's almost like getting a breath of fresh air if everybody approves it and without having to go through the agony of possibly being forced to close down for a few weeks while someone's kicking the tires and doing everything they have to do to exit from the bankruptcy," Schwall said. "That would be the best thing for our customers, our employees and all of us here, to have this sale come about from these interested parties."
Linwood said in court documents it could run out of cash by August.
The company aims to sell its inventory - excluding some goods in which hospitality maker Kimball International has an interest - along with operating concepts, designs, trademarks and the name Linwood Furniture, among other tangible and intangible assets.
Bank of the Carolinas also has a priority claim to certain planer, gluer, router and sanding equipment.
Linwood opened in 2006 to keep production of North Carolina artist Bob Timberlake's licensed furniture in the United States. Century Furniture has since taken over the Timberlake license.
Linwood said its bankruptcy filing resulted in part from the company's effort last year to focus on being an OEM manufacturer for hospitality furniture companies. Officials said that was a high volume but low margin business model.
The company still sees some opportunity in hospitality contracts, but margins would have to be better, Schwall said.
"There's several of those in the wind. But those don't really come about until the fourth quarter," he said.
In its original Chapter 11 filing, the company listed about $3.7 million in assets and $6.9 million in debt.