- Law firms
- Related documents
- ABC could use part of the $ 5.7 million loan to fund operations
- Company targets sale by Halloween
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(Reuters) – Luxury furniture retailer ABC Carpet & Home on Friday obtained court approval to tap part of a $ 5.7 million loan to fund its operations while it is bankrupt.
In a virtual hearing, U.S. bankruptcy judge David S. Jones in Manhattan approved access by the company, which is represented by Greenberg Traurig, to $ 2.25 million in to lend on an interim basis and will review the rest later this month.
The New York-based company has filed for Chapter 11 protection with the intention of selling its assets on Wednesday with around $ 8 million in secured debt and $ 80 million in unsecured debt. The company has blamed the effects of the COVID-19 pandemic for its problems, including the theft of many potential customers who have left New York. Bankruptcy is notable in a year with little Chapter 11 retailing compared to 2020, when giants such as JC Penney and Neiman Marcus filed for bankruptcy protection.
The company is looking to sell its assets by the end of October and has lined up a $ 15.3 million offer from 888 Capital, an entity controlled by Regal Investments. ABC owner Paulette Cole, the great-granddaughter of the company’s founder, owns a minority stake in 888 Capital.
888 Capital also provides the bankruptcy loan.
In addition to resisting the pandemic, ABC had been affected in recent years by the market shift towards online shopping as well as construction delays related to its flagship location in New York, according to court documents. The company generated $ 25.46 million in revenue from January 1 to July 31, compared to $ 59.1 million for this period in 2017.
Although ABC has grown over the past few decades, opening stores in Florida and London, it has since had to downsize its two New York locations in Manhattan and Brooklyn. ABC Kitchen, the restaurant next to the ABC Carpet flagship in New York City, is also owned by Cole but is not part of the bankruptcy and will not be part of the sale.
A significant portion of the company’s unsecured debt is owed to Cole, who issued a $ 40 million unsecured loan to keep ABC afloat before bankruptcy. Another unsecured loan of $ 15 million is owed to Northern Trust.
“It is really important for the court to know that Ms Cole and her family have devoted their lives and their cash to this iconic company and brand,” Cole’s attorney, Michael Sirota of Cole Schotz, said at the hearing. Friday.
In addition to approving interim access to the loan, Jones authorized ABC to perform payroll and meet certain customer obligations.
The case is In re ABC Carpet Co. Inc., US Bankruptcy Court, Southern District of New York, No. 21-11591.
For ABC: Oscar Pinkas, Sara Hoffman and Ari Newman of Greenberg Traurig
For Cole: Michael Sirota by Cole Schotz
For Northern Trust: Katie Catanese of Foley & Lardner
For 888 Capital: Lori Schwartz of Robinson Brog Leinwand Greene Genovese & Gluck