Home improvement chain reveals bankruptcy plan as retailers close 2,600 stores

A MASSIVE flooring company has considered filing for bankruptcy as retailers continue to shutter stores across the country.

As people cut back on home renovation and inflation continues to skyrocket, sales have depleted.

LL Flooring has considered filing for Chapter 11 Bankruptcy, sources sayCredit: Getty
The consideration comes after home renovations have slowed and sales declinedCredit: Getty

LL Flooring, previously known as Lumber Liquidators before its renaming in 2020, was founded in 1994.

The company has 442 stores across 47 states after coming from a modest beginning selling from the back of a pick-up truck in Stoughton, Massachusetts — about 22 miles south of Boston, according to the Daily Mail.

“To look back and see how far we’ve come in 20 years is almost like a dream,” founder Tom Sullivan said about the company in 2014, per the outlet.

“We’ve gone from a tiny operation to having served more than two million people and, along the way, changed the way hardwood flooring is sold. 

“Our customers know that the value and quality of their floors are unmatched.”

There has been some chatter about LL Flooring considering Chapter 11 Bankruptcy, sources told Bloomberg.

People aware of the company’s movements said it may file within the coming weeks.

If it files, it will be protected from creditors as it restructures its foundation.

Potential investors have been contacted by LL Flooring’s company adviser Houlihan Lokey about putting money towards a new version of the brand, per Bloomberg.

After the bankruptcy speculations were published, shares of the company fell 53.5% to 60 cents, according to the New York Post.

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LL Flooring is also trying to sell a distribution center in Virginia to bring in money.

It might fail to meet a minimum liquidity rule in its credit agreement during the third quarter, so it is currently in discussions with banks about changing the agreement, per Bloomberg.

NOT ALONE

LL Flooring is not alone in its bankruptcy woes.

There have been almost 2,600 store closures in the first seven months of 2024.

How does bankruptcy work?

Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.

The process allows businesses to start fresh and gain access to new credit.

Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.

Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.

Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.

Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.

Basic Fun, a popular toy company, has also filed for Chapter 11 bankruptcy after almost two decades in business.

The company was started by co-founder and current CEO Jay Foreman and co-founder John MacDonald in 2009, according to Retail Dive.

Over the years, Basic Fun acquired brands such as Tonka, Care Bears, and Lincoln Logs.

After Toys R Us filed for bankruptcy in 2017, Basic Fun also started to have issues.

“Since the demise of our industry’s largest toy retailer Toys R Us in 2018, through the tumult of the trade wars with China in 2019, Covid in 2020 through 2021, the travails of the supply chain crisis in 2022, inventory overstocks in 2023, and consumer slowdown in the early part of 2024, our industry and Basic Fun have been through a gauntlet of challenges,” Foreman said in a statement.

The CEO hopes the bankruptcy period will give them time to restructure.

“We intend to use the restructuring process to put those challenges in the rear-view mirror, enabling us to secure a successful future and position us for growth and value creation,” Foreman said.

The U.S. Sun has contacted LL Flooring for comment.

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