A Chapter 7 bankruptcy filing with the US has been forced upon Lane Furniture by three creditors, including the bank Wells Fargo. Court for Bankruptcy here.
Wells Fargo stated in court documents filed on December 1 that it was joined by two additional United Furniture/Lane Furniture creditors. 30 that the move is necessary to help offset the $99.2 million the furniture maker owes the bank.
Security Associates of Mississippi/Alabama, a security company that Wells Fargo hired to guard the shuttered Lane factories, and V&B International, a Port Gibson, Miss. company, are also signatories to the petition on behalf of Wells Fargo., hardwood sawmill and wood products manufacturer. In accordance with court records, United Furniture owes the three businesses a total of more than $99.5 million, excluding interest, fees, and expenses.
November saw a sudden closure of United Furniture. 22 and informed all employees via email or text that the company was ceasing operations. Numerous lawsuits filed by former employees and suppliers as a result of the abrupt closure have shocked the industry.
A few more specifics about the week the company closed are described in the court document. In a statement included with the petition, managing director of Wells Fargo Marc Grossman stated that United management contacted the bank on November 1. 21 “with little prior notice,” advising that the company needed “substantial capital immediately or it would not be able to fund continued operations.”
According to Grossman’s document, the bank was owed more than $97.8 million in principal under the credit line and “Multiple terms of the credit agreement were being violated by UFI.” Because of that default, Wells Fargo told the management team that it “could not accede to its request for the additional funding on such short notice without additional information, including a budget for restructuring purposes and internal credit committee approval at Wells Fargo.”
Late that same day, November. 21 – United Furniture’s management told Grossman that it had decided to “cease operations and lay off all of its employees effective immediately.” In addition to ceasing operations, United Furniture left its 15 locations without security and insurance after November. 30.
On Nov. 22, the bank was told that all “officers of With the exception of UFI’s CEO and CFO, who both resigned on November, UFI had resigned with immediate effect. 23, 2022.”
Following the resignation of the officers, Wells Fargo hired Focus Management Group, a turnaround business, to assist in securing United’s assets and systems and to start selling off Wells Fargo’s collateral.
United Furniture’s financial difficulties are detailed in court documents. The Grossman declaration contains information about a credit agreement that was signed in January. 28, 2021, that provided the company with a Credit facility of up to $130 million from Wells Fargo.
The credit line is “fully secured by all of UFI’s personal property and other assets, including all of UFI’s cash, receivables, inventory, chattel paper, furniture, equipment and books and records, on all of which Wells Fargo has a lien”, according to the declaration. According to Grossman, the agreement was modified four times: on March 8, 2021; on January. 31, 2022; June 30, 2022, and most recently July 1, 2022
The bankruptcy court has been asked by Wells Fargo, V&B International, and Security Associates of Mississippi/Alabama to name an interim trustee, assign one or more United board members the responsibility of filing financial information and making an oath of allegiance, give United 10 days to respond to the filing, and schedule a trial for 20 days.
News source: furnituretoday.com
