Designer Furniture Warehouse, the regionally recognized furniture retailer, has declared Chapter 11 bankruptcy and will be closing all but one of its eleven stores, according to a bankruptcy attorney close to the case. DFW had, at the time of filing, assets listed in the $1 million range and debts at nearly ten times that amount. Most of the retailer’s unsecured debt belongs to furniture suppliers such as Ashley, to whom the company owes a quarter of a million dollars.
Chapter 11 Results in Closings
In DFW’s case, the retailer decided the most prudent course of action would be inventory liquidation rather than a more traditional restructuring of debt. Ten stores will be holding going out of business sales, while the retailer’s main store in Columbus OH will remain open. A promotions company has been appointed to oversee the management of the going out of business sales.
One unique twist to the DFW Chapter 11 story is that the secured creditors have agreed to a special agreement that will allow the chain to fulfill all its outstanding customer orders that have not yet been delivered. In many cases, these orders go unfilled in Chapter 11 cases, despite the fact that customers have put down deposits, as the secured creditors get first priority. The twist is a refreshing one for those DFW customers who had pending orders, as they will indeed see their furniture arrive as planned.
The Chapter 11 case has not yet been approved by the bankruptcy court, but a hearing will likely happen before the end of the year.