October 14, 2013
By John Clark
Furniture Brands International, the manufacturer of iconic brands like Thomasville, Lane, Drexel Heritage, and Broyhill, is looking for bankruptcy help, according to a recent report from USA Today.
Sources say the company is looking to sell most of its business assets to Oaktree Capital Management, an investment firm that helps rescue struggling companies by purchasing their assets at a discount rate.
The major furniture maker, which is based in St. Louis, also operates the Thomasville chain of furniture outlets, which could also be affected by the pending sale. The sale, however, will have to be approved by the bankruptcy court before it is finalized.
Sources note that Furniture Brands was decimated by the economic recession, which led many Americans to reduce their purchases of non-essential items like sofas and recliners. Unlike many of its competitors, however, the company wasn’t able to recover during the recent uptick in economic activity.
In addition to its cash woes, the stock price of Furniture Brands has been steadily falling since 2002, which portended bad financial news for the company. Unfortunately, the drop on share price did, in fact, parallel financial struggles for the company.
According to reports, Furniture Brands lost nearly $41 million during the latest fiscal quarter, prompting it to cut costs and look to sell most of its assets.
After these efforts failed to cure its financial woes, CEO Ralph Scozzafava and the board of directors decided that bankruptcy was the company’s best course of action.
Indeed, the decision may lead to a rapid recovery, as Furniture Brands already reached a tentative sale of its assets, except its line of Lane furniture, when it filed in U.S. Bankruptcy Court in Delaware, sources report.
In exchange for the assets, Oaktree will give Furniture Brands $140 in emergency financing, which would allow the company to continue its normal operations while the bankruptcy proceeds through court.
In addition, the company is currently weighing offers for its Lane brand, which is likely worth more than its other assets. Furniture Brands officials claims they have already received multiple "indications of interest" from potential buyers.