The iconic luxury home furnishings retailer plans to sell substantially all assets as a going concern
NEW YORK — Struggling ABC Carpet & Home ended speculation late Wednesday by filing for Chapter 11 bankruptcy protection with plans to sell off its assets as a going concern.
In the petition filed in the U.S. Bankruptcy Court’s Southern District of New York, the Top 100 company estimated assets in the $10 million to $50 million range and debts of $50 million to $100 million. Its 30 largest unsecured creditors listed in the petition are owed nearly $19 million, with more than $15 million of that owed to Northern Trust. Home furnishings resource McCreary Modern is listed as the second largest unsecured creditor with a $263,661 claim. Others included carpet export house Ashoka Creations in Jaipur, India ($205,787) and Art Palace ($193,248).
At least six additional carpet and rug companies are listed among the largest trade creditors.
In a court document, the retailer said its business has been “severely impacted by the pandemic, including government-mandated store closures, fulfillment issues due to supply chain shortages, production delays, and delays in return to work for nearby commercial office spaces.”
It said the impact on its business was even more pronounced than for many other retailers given its flagship store is in New York City, which was subject to more restrictive regulations and experienced “a mass exodus of current and prospective customers leaving the city.”
But the problems really began long before the pandemic. ABC said its business has been hurt over recent years by other trends, including the shift to online sales, changing consumer preferences and construction delays that impacted its 888 Broadway location.
ABC’s “liquidity position has now reached a point that further deterioration, without near-term funding, would likely require (ABC) cease operating,” the company said in a court document.
Prior to the filing, the retailer hired strategic advisors and reached out to several parties to obtain financing, but was not offered viable terms because of its deteriorated financial condition. After exploring various strategic options, the company determined “a sale of substantially all of their assets as a going concern is in the best interests of their creditors and estates.”
The retailer is seeking approval for up to $5.7 million in debtor-in-possession financing from 888 Capital Partners, the proposed stalking horse bidder for the assets.