While under Chapter 11 bankruptcy protection, a furniture company that has failed to increase its revenue is now headed toward a Chapter 7 case, as a U.S. Bankruptcy Court Administrator has filed a motion to have the company's assets sold, as reported by the Winston-Salem Journal on August 10.
Administrator Michael West stated that Linwood Furniture LLC "is not in a position to continue operations and is not conducting any ongoing business. The conversion of this case is in the best interests of creditors and the estate."
The Chapter 11 protection was initially filed on March 5.
Lexington-based Linwood Furniture LLC employs 103 people.
West, unavailable to comment to reporters, has stated in his motion that it isn't in the best interest of creditors, or the bankruptcy estate, to allow Linwood to persist in loosing money and that the business has failed to "provide financial information to the bankruptcy administrator and (failed) to pay the Chapter 11 fees for the second quarter."
Judge Catharine Aron has scheduled the hearing for September 5 in Winston-Salem Court.
The furniture company was formed in March of 2006. The focus of the construction was in agreement with the wishes of artist Bob Timberlake, and to construct his popular selling collection, World of Bob Timberlake, domestically. Linwood Furniture makes the Bob Timberlake line of products on a contract-basis for Century Furniture.
In the initial bankruptcy filing debts were listed at $6.89 million, and assets, at nearly half that amount, were listed as $3.65 million.
In later filings the company claimed that it would use up its operational money and be forced to cease operations – this August – if they were unable to obtain either a new owner or additional funds.
Company records, according to operating reports filed on June 20, show a loss of $55,701, income at $538,071 and expenses at $593.772.
Delays in receiving materials have been blamed for delays in completing a sizeable accumulation of furniture orders.
Jeff Schwall, the president and chief executive officer of Linwood, commented, "We are working each day, short staff this week to keep shipping orders. Hopefully there are negotiations going on" the day before West announced his recommendation for the Chapter 7 conversion.
Schwall has claimed to know of at least four groups that had "serious interest" in purchasing Linwood and maintaining the company as a manufacturer. One such group involved a manufacturer and distributor that was in negotiations to sell Linwood products in China.
On August 9 a bankruptcy auction had been scheduled, however, a minimum qualifying bid – of $2.57 million – was not made.
The reduction of debts and a focus more on manufacturing residential furniture was the primary goal of Linwood's bankruptcy protection filing, and just prior to the bankruptcy they had terminated a contract they had with Kimball Hospitality – which accounted for Linwood's largest chunk or business.
Contact a bankruptcy attorney if you are considering a business or personal bankruptcy. Maintaining what you can in your business, or personal assets, will be considered during the filing procedure.