by Subsequent decline in housing sales, construction had adverse impact on furniture sales
LOMBARD, Ill. — A rise in interest rates that impacted housing sales and construction was among the factors that led to The RoomPlace filing for Chapter 11 bankruptcy, according to a declaration from company President Valerie Berman-Knight.
Berman-Knight was specifically referring to rates that reached higher than 7% in late 2022, and later rose toward 8% in late 2023. As a result, she noted, “the home furnishings industry felt an immediate and severe impact. Home sales and construction activity decreased, which negatively impacts furniture sales and profitability.”
She went on to note that this “macroeconomic reality” has had an increasingly adverse effect on The RoomPlace’s business, adding that the impact on stores in its outlying markets has been particularly severe. “To remain a viable business, The RoomPlace must align its costs with its projected sales.”
The statement was filed Feb. 4, two days after the company filed for Chapter 11 bankruptcy protection. As part of its reorganization plan, it will close eight of its stores in outlying markets and refocus its efforts on its remaining 18 stores in the Chicago area.
The eight stores it plans to close include six locations in and around Indianapolis, one store in Kenosha, Wisconsin, and one store in Peoria, Illinois. The RoomPlace said it will contract with Planned Furniture Promotions to conduct store closing sales in those locations and added that it will fulfill existing orders placed prior to Feb. 2.
While the declaration itself was brief in nature, it was part of a larger document that included First Day motions aimed at keeping its business functioning as normal during the bankruptcy process. This includes the payment of utility services, payroll and payroll taxes for its 493 employees, as well as insurance premiums, for example.
“The use of cash collateral will permit debtors to, among other things, preserve the value of the estate, continue operations, maintain jobs for 493 employees, satisfy its post-petition obligations and provide the working capital needed to maintain its day-to-day operations,” the declaration stated. “Absent immediate use of cash collateral, debtors will likely have to cease business operations to the material detriment of creditors, vendors, suppliers, employees, stakeholders and other parties of interest. … This liquidity is necessary for the debtors to reorganize and demonstrate to its customers, suppliers, vendors and stakeholders that it has sufficient capital to ensure ongoing operations.”
The declaration also included a brief history of the company, which has served the Chicago area dating back to 1912. That was when Sam Berman, grandfather of current CEO Bruce Berman, opened Harlem Furniture on Harlem Avenue in Chicago’s West Town neighborhood. As a family-owned business, it operated a single store until 1985 when it began to expand in the area.
By the time it rebranded to the RoomPlace in 2001, it had 20 locations. In 2004, the declaration stated, a private equity firm purchased a majority stake in the company and during that period of ownership, it expanded into Indianapolis starting in 2007. Four years later, Bruce Berman purchased the private equity owner’s stake in the business.
The retailer then opened a store in Peoria, Illinois, in 2018 and opened the one in Kenosha, Wisconsin, in 2019.
The company is wholly owned by nondebtor TRP Holdings LLC. The RoomPlace manages sale operations at the company’s brick-and-mortar stores and online at www.theroomplace.com, and sister company TRP Brands manages the direct-to-consumer, e-commerce side of the business under the Apt2B, Seatables and Flipit brands, according to the declaration.
“The RoomPlace has been a family-owned and community-oriented business,” the declaration continued. “With its third- and fourth-generation family owners and operators, it has always played a part and seeks to continue to be active in the communities it serves.”
