From Home Furnishing Business
Furniture Brands Files Chapter 11; Plans Sale of Brands
Furniture Brands International (OTC: FBNI) has filed Chapter 11 bankruptcy protection today with the U.S. Bankruptcy Court in Delaware and said it plans to sell most of its assets, including brand names like Broyhill, Drexel Heritage and Henredon.
Under the filing the company also said that it will retain its Lane business, but it is seeking sale alternatives and says it has several interested buyers.
Oaktree Capital, the company that Furniture Brands recently hired as an advisor, is also providing $140 million in debtor-in-possession financing to Furniture Brands. The financing includes $50 million of "new liquidity."
Oaktree will also acquire assets of Furniture Brands through a court-supervised auction process subject to bankruptcy court approval and certain other conditions. The Oaktree bid will serve as a starting point for a sale process for the company, which could include other bidders.
According the to the company's press releases, the new financing, subject to court approval, allows the company to operate business uninterrupted and continue to meet its financial obligations, including the timely payment of employee wages and benefits, continued servicing of customer orders and shipments, and other obligations.
"After careful consideration of a range of alternatives, we firmly believe that our Chapter 11 process represents the best long-term solution for Furniture Brands to address its liquidity challenges, strengthen its operations and continue to provide our customers with the highest quality products and service that they have come to expect from us," said Ralph Scozzafava , chairman of the board and CEO. "Our portfolio includes some of the most well-respected brands in the furniture industry, and we are pleased to be partnering with Oaktree, which has deep experience working with Furniture Brands and other companies in our industry. We are highly confident that as a result of these actions, we will protect our valuable franchise and emerge as an even stronger company."
In mid-afternoon trading, the Furniture Brands' stock was trading at 28.5 cents.
The company estimates in court documents that its assets were worth $546.7 million and its liabilities were worth $550.1 million.
It said its largest creditors were LP Products PTE Ltd, a trade creditor owed $2.5 million, and the Pension Benefit Guaranty Corp, a government insurer of defined-benefit pensions.
"We appreciate the continued support of our customers and suppliers during this process," Scozzafava said. "We value our relationships with them and look forward to continuing those relationships for many years to come. We also appreciate the dedication and loyalty of our talented employees, whose support is, and always will be, critical to our success and to the future of the company."