LL Flooring Holding’s efforts to find someone interested in taking over its business have failed, and the company is moving to liquidate its business, the company said in a filing with the U.S. Securities and Exchange Commission.
The Henrico County-based retailer also has asked the firm managing the going out of business sales at 94 stores to expand this effort to all of its more than 300 outlets.
The company, which changed its name from Lumber Liquidators in the wake of lawsuits over formaldehyde-tainted flooring and allegations of damage to endangered animals’ habitat, said it sold its distribution center in Sandston to a Delaware limited liability company for $104.75 million.
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Henrico County-based LL Flooring, formerly known as Lumber Liquidators, has a store at 8818 W. Broad St. The company, which has filed for bankruptcy, said it is closing 94 stores. Those include only one in Virginia, in Woodbridge.
It will lease a bit more than half the space for about $334,000 a month.
LL Flooring said in the filing: “Despite the Company’s extensive efforts and negotiations with multiple bidders to pursue a going-concern sale of the Company, and the extension of the original deadline to reach a Stalking Horse Agreement, the Company was unable to reach a Stalking Horse Agreement that, in the Company’s business judgment and in consultation with key stakeholders, would maximize the value of the Company’s assets for the benefit of its stakeholders.”
It was referring to an agreement with an interested potential buyer that would have established a minimum price for the company’s assets ahead of a bankruptcy court decision on a reorganization plan or an auction of those assets.
As a result, the company said, it told the bankruptcy court that would it proceed with liquidating its business.
In a letter to LL Flooring, Hilco Merchant Resources said it agreed to shut down the retailer’s remaining stores.
Hilco said the various “Going out of Business,” “Store Closing,” “Everything Must Go,” “Everything on Sale” or similar sales at the LL Flooring stores would start on or about Sept. 6 and end no later than Nov. 30.
LL Flooring has been struggling with soft demand and a U.S. Customs hold on some of its products. It has lost money for seven quarters in a row under its current leadership.
The company, which employs about 2,100 people nationwide, joins a growing list of retailers that have filed for bankruptcy so far this year. The list includes craft store chain Joann, beauty product retailer The Body Shop and apparel store Express.
The struggling firm, fresh off one of the fiercest corporate battles for control in recent years, last month asked the U.S. Bankruptcy Court in Delaware to give it breathing space from its creditors while it seeks to sell itself as a going concern.
The aim was “to provide LL Flooring with additional time and financial flexibility as we reduce our physical footprint and close certain stores while pursuing a going-concern sale of the rest of our business,” Charles Tyson, LL Flooring president and CEO, said at the time.
The plan was to close 94 stores – including one in Virginia – and to sell the distribution center, while continuing to operate the rest of its stores and its online sales platform, with support of up to $130 million of financing promised by its banks.
Its court filings showed it has $501 million of assets and $416 million in debts, with the two largest creditors — a Singapore vinyl firm and a bamboo shipper in Thailand — each owed more than $7 million.
Earlier this year the company’s departed founder, Thomas Sullivan, launched a successful campaign to return to the board of directors with two allies, saying the company’s leaders had “overseen staggering operational losses and clung to a failing strategy that has placed the Company on the verge of bankruptcy.”
The board fought back saying that during Sullivan’s time leading the company, its “previous name and branding of ‘Lumber Liquidators’ was permanently tarnished,” and that it believed Sullivan might be trying to force a sale of the company to himself.
