Furniture Factory Outlet joins more than two dozen other retailers filing bankruptcy in 2020. The midwestern furniture dealer filed Chapter 11 in Delaware on Thursday, Nov. 5, citing tight cash and supply chain disruption brought on by the COVID-19 pandemic.
Owner Sun Capital Partners wants to sell the business and has garnered a stalking horse bid of $7 million from Ohio-based American Freight.
The company was founded in 1984 and it operated 68 stores prior to store closures forced by COVID-19. The company closed 37 locations in recent months, leaving it 31 stores in Arkansas, Missouri, Oklahoma, Kentucky and Indiana, Chief Financial Officer Donald Roach noted in the filing.
Roach said the company had new leadership and was making progress on a turnaround strategy to boost its brand when COVID-19 dropped company revenues to nearly zero. Then came the layoff of 95% of employees and rapid store closures. He said the reopening of fewer stores and significant supply chain disruptions have created ongoing financial challenges for the organization.
He said it’s been harder to acquire raw materials and that has hurt manufacturers’ ability to produce goods. He said a lack of inventory continues hurt revenue.
The company hired FocalPoint Securities to shop the business for months leading up to the recent bankruptcy filing. Furniture Factory Outlet has debt of $48.4 million according to the filing records, which has likely kept bidders at bay.
The company continues to operate 13 stores in Arkansas.