Readers in New Jersey may be familiar with Linwood Furniture, a company that makes furniture for the hospitality industry. The company filed commercial bankruptcy under Chapter 11 in March 2012. Now the court administrator in charge of the case has asked to have the filing changed to a Chapter 7. This comes after the company failed to file monthly reports or to pay the second quarter fees associated with the original filing.
As those in New Jersey who are familiar with bankruptcy know, the change to a Chapter 7 filing means that the company will likely be forced to sell its assets and close its doors. Company officials however, say that they continue to produce several lines of furniture. The court will decide whether to change the commercial bankruptcy to Chapter 7 or to allow the company to continue to work to exit the Chapter 11.
At the time of the initial filing, Linwood Furniture reported assets of about $3.7 million and debts of $6.9 million. An auction scheduled early this month was cancelled after no buyers appeared who were willing to pay the minimum bid of $2.56 million. This cancellation and the continued losses from the company are a large part of what has driven the request to change the filing.
The commercial bankruptcy filing came after the company had worked to weather the recent recession. Efforts to change the focus of the company to become an OEM manufacturer for hospitality furniture companies have proved unsuccessful. Now the fate of Linwood Furniture lies in the hands of the court as it decides whether to allow the company to move forward or to hasten the end. Either form of bankruptcy will allow Linwood to better shoulder their debt load and move forward in a more financially secure manner.
Source: Furniture Today, "Linwood Furniture administrator seeks Chapter 7," Heath E. Combs, Aug. 10, 2012