Furniture Brands Files Chapter 11
ST. LOUIS-Furniture Brands International, owners of some of the biggest names in furniture including Broyhill, Drexel Heritage and Thomasville, announced today that it has filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The company also announced that it has entered into an asset purchase agreement with affiliates of funds managed by Oaktree Capital Management. Under the agreement, Oaktree will acquire substantially all of the assets of Furniture Brands except the company's Lane business. This bid, the company said, will serve as a starting point for a sale process for the company, which may include other bidders. Furniture Brands added that it is engaged in a process to evaluate sale alternatives for the Lane business, and has received several indications of interest from potential acquirers.
Furniture Brands also announced that it has received a commitment from Oaktree for $140 million in Debtor-in-Possession (DIP) financing, including $50 million of new liquidity. The new facility, which is subject to court approval, will enable the company to operate business uninterrupted and continue to meet its financial obligations, including the timely payment of employee wages and benefits, continued servicing of customer orders and shipments, and other obligations.
"After careful consideration of a range of alternatives, we firmly believe that our Chapter 11 process represents the best long-term solution for Furniture Brands to address its liquidity challenges, strengthen its operations and continue to provide our customers with the highest quality products and service that they have come to expect from us," said Ralph Scozzafava, CEO of Furniture Brands. "Our portfolio includes some of the most well-respected brands in the furniture industry, and we are pleased to be partnering with Oaktree, which has deep experience working with Furniture Brands and other companies in our industry. We are highly confident that as a result of these actions, we will protect our valuable franchise and emerge as an even stronger company."