ST. LOUIS (AP) - The maker of furniture brands such as Thomasville, Broyhill, Lane and Drexel Heritage said Monday that it has filed for Chapter 11 bankruptcy protection.
Furniture Brands International Inc. said it hopes to sell the bulk of its business to investment firm Oaktree Capital Management.
The St. Louis-based company, which also runs the Thomasville chain of furniture stores, struggled like many other companies after the collapse of the housing market. But unlike some of its peers, its business has not rebounded with the recovery in home sales and the broader economy.
Furniture Brands reported in August that it widened its fiscal second-quarter net loss to $40.8 million on weaker revenue and major charges to write down the value of its brands. It also said that it would cut costs and pursue the sale of some of its assets.
CEO Ralph Scozzafava said Monday that the company determined filing for bankruptcy protection was the best way to address its liquidity challenges and strengthen its operations.
The company, which filed with the U.S. Bankruptcy Court in Delaware, said that it has reached an agreement to sell it nearly of its assets, except the Lane brand, to Oaktree under an auction process. The court must approve the plan and other bidders may emerge.
Furniture Brands said that Oaktree will provide $140 million in debtor-in-possession financing, which is also subject to court approval. The company said the financing will enable it to operate its business uninterrupted and meet all its financial obligations, such as employee wages.
The company also said that it is considering the sale of its Lane business and has received several "indications of interest" from potential acquirers.
Shares of Furniture Brands fell almost 47 percent to close at 30 cents Monday. Its stock value has been falling fairly steadily since 2002 when it approached $300.
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