Jennifer Convertibles Files Chapter 11

July 18, 2010  by in UnCategorized   

By Home Furnishings Business in Bankruptcy on July 19, 2010

Woodbury, N.Y.-based Jennifer Convertibles (OTC BB: JENN.OB) has filed for bankruptcy protection with $46.4 million in debt.

The retailer attributed the filing to a "lack of liquidity which resulted from the substantial  losses the company has incurred in recent periods." The release goes on to say that the company was unsuccessful in its efforts to obtain alternative financing that would allow it to continue operating outside of bankruptcy.

In a statement, the retailer said it has reached an agreement with its largest creditor and key foreign supplier Haining Mengnu Co. Ltd. Group under which Mengnu will continue to supply goods to Jennifer and will convert a large portion of its pre-petition debt into company equity. The retailer owes Mengnu $16.7 million. The agreement is contingent upon court approval.

Jennifer's 30 largest unsecured creditors are owed about $26.3 million.

The company listed assets of $25.9 million as of July 16 in Chapter 11 documents filed Sunday in U.S. Bankruptcy Court in Manhattan. Eleven affiliates also sought protection.

The company owns 142 Jennifer Convertibles-branded stores and 12 Jennifer Leather stores, and operates five Ashley Furniture HomeStores in its markets.

"We have negotiated several key agreements with our suppliers and, in order to achieve profitability, are exiting markets in which we previously operated in order to properly realign our business during the reorganization," said Harley Greenfield, CEO and chairman of the board. "Due to the quality of our products and our people, I am confident that we will emerge as a stronger organization that will better satisfy our customers, suppliers and employees. By agreeing with Mengnu in advance of the filing, we will be in a great position to proceed with an expeditious restructuring through bankruptcy which will provide us with a viable capital structure as well as additional financing. This agreement also assures that our obligations to our customers will continue to be met both now and in the future."