Wickes Furniture Co., hit by the downturn that has hit furniture retailers in the wake of the housing industry's big slump, filed Sunday for Chapter 11 bankruptcy protection.A Personal Side of Wickes
Wickes, based in Wheeling, is owned by Sun Capital Partners Inc., a Boca Raton investment firm that specializes in leveraged buyouts and other transactions.
In its filing with the federal bankruptcy court in Wilmington, Del., Wickes declared that it has assets of between $10 million and $50 million, and estimated its liabilities at between $50 million and $100 million.
The trade magazine Furniture Today reported in mid-January that Wickes Furniture was asking suppliers to sign an agreement that would postpone the company's repayment of overdue debt until mid-2009.
I knew this was coming weeks ago. My wife Joanne works at Wickes as an accountant. When you are not paying bills any bills for 3 weeks straight you know it's over. Today they let the entire buying staff go and a huge percent of the corporate office. Joanne will be on for possibly 2 more weeks.
Wickes was borrowing millions at 12% from a major bank for a long time. I won't name the bank because I do not know if it is public information. The bank receiving their assets (the primary asset being the corporate office) will find it will not come close to covering the debt.
Sun Capital Partners Inc. made a mistake on this one. Their investment may be worth zero. Add this to the Overhang of LBO Debt gone sour.
The Furniture business in the US is dead. I recently talked about the furniture liquidation business in the Fallout From US Slowdown Hits Canada. Now there will be more furniture for someone to liquidate.
The ranks of the unemployed may soon go up by one. This one strikes home.
I simply cannot stress enough how important it is to be prepared for these kinds of events. Fortunately we were prepared.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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