GuildMaster facing federal charges, files Chapter 11

Jenny Heinzen York - Home Accents Today -- Furniture Today, December 17, 2012

SPRINGFIELD, Mo. — Accent importer GuildMaster filed for bankruptcy protection on Thursday following a federal indictment alleging sale of lamps with counterfeit Underwriters Laboratories stickers.

The indictment, filed in the Western District of Missouri, said that U.S. Customs and Border Protection seized 10 shipments of lamps with counterfeit UL labels.

The seizures took place between Jan. 10 and March 21, 2012, from three Chinese factories and GuildMaster's Springfield warehouse. More than 5,000 lamps were seized, documents said.

An official with GuildMaster said on Monday that the company continues to ship other products.

Underwriters Laboratories, or UL, is an independent product safety certification organization.

The indictment said that between 2009 and March 2012, GuildMaster imported lamps from Dongguan Yangming Hardware Crafts Limited, a Chinese lamp factory that GuildMaster acquired in October 2011.

In a statement, GuildMaster said the "questionable stickers" were part of a process in existence at a factory when it was purchased.

"The previous company owners believed that they were in compliance with U.S. laws by purchasing the stickers from an agency of the Chinese government. GuildMaster never implied or marketed that the lamps were UL-certified," the statement said.

It added that the claim of using the UL trademark to increase the value of its lamps was "ridiculous" and that it was an "extreme stretch" to imply criminal activity.

"If that were that case we would have not only advertised that the lamps were UL listed but we would have merchandised them so that the customer would be aware that they were UL listed," the statement said.

The indictment said that UL terminated its relationship with GuildMaster in 2007 after about 17 years because the company failed to pay outstanding invoices. It added that no contractual relationship ever existed between UL and Dongguan Yangming.

Prior to the indictment, Steve Crowder, president and CEO of GuildMaster, said the company planned to file for Chapter 11 bankruptcy to restructure debt incurred after the seizures, which accounted for more than $900,000 in inventory, lost sales and a denial of surety bonds.

Crowder also noted that beginning in March, GuildMaster was allowed to resume shipments of lamps without the offending sticker.

The Class C felony charges carry a maximum penalty of five years of probation and a $5 million fine, or twice the gain or loss from the action. The company could also face forfeiture of the seized goods, worth an estimated $1,936,190, according to the indictment.

The Chapter 11 filing said that GuildMaster employs about 25 employees in Springfield and nearly 375 employees in Indonesia and China.

In 2011, its annual sales were more than $12.5 million and the company has more than 4,000 large and small retail accounts, the filing said. It lists about $3.4 million in assets and $3.5 million in liabilities. It also lists accounts receivable as of Dec. 11 at $399,260.

Its largest shareholder, according to the Chapter 11 filing, is SRC Holding, which owns about 40% of the company's shares.

Furniture/Today Staff Writer Heath E. Combs contributed to this story.