American of Martinsville and Barcalounger File Chapter 11

Posted by MCC on May 23rd, 2010 at 07:00am

Contract furniture source, American of Martinsville and it’s sister company Barcalounger, a upholstery producer filed for Chapter 11 bankruptcy protection. The joint filings come just over a month after the two companies closed down their Martinsville, Virginia factory.

The parent company, Hancock Park Capital has already made an agreement to sell both companies to another affiliate for $1.5 million. But, the pending sale will have to be approved by the bankruptcy court. If approved, the court will conduct an auction of the companies if another bidder comes forward.

According to the court documents, the two companies have experienced operating profits that were significantly lower than anticipated over the last two years. “Due to the downturn in the economy and furniture sales in general, the debtors have been unable to maintain adequate profits to continue as a going concern,” Chapman’s statement read.

The Chapter 11 filing included a list of the 30 largest unsecured creditors. Aside from Hancock Park, the largest claim that was unsecured was with Globe Express Services a logistics provider for $619,000. Other key unsecured creditors include leather supplier, Moore and Giles for $123,151 and foam supplier, Carpenter Co. for $139,557.

Under Furniture News