June 19, 2012
By: John Clark
The RoomStore, a chain of retail furniture outlets in the Mid-Atlantic region, is planning to sell its assets at an auction this week, just a few months after filing for Chapter 11 bankruptcy, according to a report from USA Today.
The retail chain, which is based in Goochland County, Virginia, filed for bankruptcy last December, but asked permission from the bankruptcy judge this week to sell its remaining assets at an auction, which will be held later this month.
The CEO of the Richmond-based company, Stephen Giordano, says the store will try to sell its assets as a whole, but would also be amenable to selling off the company in small portions. The proceeds from the auction will go towards repaying RoomStore’s numerous creditors.
The company, which owns 28 furniture stores in Virginia, Maryland, North Carolina, and South Carolina, still holds a significant number of assets, including a large volume of inventory that remains inside its stores.
Interestingly, though, the store’s assets extend beyond its sofas and mattresses. Other valuable items of property include the mailing list of the store’s previous customers, as well as its institutional knowledge about the furniture market in the areas where it operates.
In addition, the RoomStore has a 65 percent ownership stake in Mattress Discounters, a discount bedding store, although the company hopes to hold onto this asset after the bankruptcy filing is complete.
RoomStore also reportedly hopes to keep its distribution center, which is located in Rocky Mount, North Carolina. The company, however, does not intend to continue operating as an independent outlet after bankruptcy.
According to the company’s bankruptcy petition, after the bankruptcy is over, RoomStore “will no longer operate as a retail furniture store chain.” Instead, the company reportedly intends to operate “in a reduced manner” to help provide behind-the-scenes office aid for Mattress Discounters.
Sources indicate that RoomStore tried to solve its financial woes by selling off inventory before filing for bankruptcy, but the effects of the recession were too difficult to overcome.
During the last four years, consumers have dramatically reduced their spending on furniture, and the decreased demand has led to the closure of a large number of once-successful furniture stores, especially smaller ones without a widespread national presence.
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