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From Home Furnishing Business

Investor Suit Accuses Furniture Brands, Executives of Hiding Financial Problems

Furniture Brands International is facing a class-action lawsuit from investors who accuse the company and its management of deliberately misleading them about its financial status prior to entering Chapter 11 bankruptcy protection last month.

The lawsuit was filed in the Eastern District of Missouri for the U.S. District Court. It was filed against the company; Ralph Scozzafava, chairman and chief executive; and Vance Johnston, chief financial officer.

The lawsuit seeks to cover investors who bought Furniture Brands stock between Feb. 13 (share price $10.57) and Aug. 5 (share price $2.21).

On Aug. 6, the company said in its second-quarter earnings report that it was facing liquidity issues that could require significant cost-reduction efforts including the potential sales of non-core or underperforming assets. The share price dropped 38 percent, or by 84 cents, to $1.37 on that news.


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Source: Winston-Salem Journal 

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