L.D. Brinkman Struggle Leads to Chapter 11

Lewisville, TX, May 13--Up until about four years ago, L.D. Brinkman Corp. was ringing up annual sales of about $400 million as one of the nation's largest suppliers of wood flooring, tile and carpet, according to the Dallas Business Journal. It was so appealing, in fact, that Dalton, Ga. based Beaulieu Group L.L.C. snapped up the robust company in December 1999 as a way to supplement its carpet sales. Soon after, though, Brinkman began to lose the momentum it built over the previous 40 years. On April 29, the downsized company from Lewisville filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Dallas. Claiming assets and debts between $10 million and $50 million and a range of creditors between 200 and 999, Brinkman was still trying to survive on its own after a management-led buyout of the company last July. Small and once again independent, Brinkman has come full circle. Eddie M. Lesok, who helped orchestrate the buyout and eventually became Brinkman's CEO, blamed the slow economy for the financial troubles of his company, which reported sales of $69 million in the nine months it's been on its own, according to bankruptcy filings. "I think it's just the economic conditions (that) were very difficult during the winter months," said Lesok, who previously worked his way up to chairman and CEO of Fort Worth-based Color Tile Inc. before leaving in 1995 on the verge of a Chapter 11 bankruptcy filing. "Floorcovering products," he added, "are a postponable item." "You can pretty much live with ugly floors," said Chris Davis, who for the past nine years has served as CEO of the U.S. industry's largest trade group, the 3,300-member World Floor Covering Association, in Anaheim, Calif. "It's one of those things on the residential side that is definitely a discretionary income purchase, and the commercial side has been suffering somewhat from the fact that nobody's spending any money." More specifically, though, Davis said Brinkman struggled since 1999 because the company was not a good fit for Beaulieu. "Their problem seems to have been that in the time that they were acquired by Beaulieu, they lost some of the lines that they were distributing," Davis said. "So they really didn't have as diversified a product lineup as they had once had." Lesok doesn't argue that point. He did say, however, that since splitting off from Beaulieu the company managed to increase monthly sales -- just not as much as he would have hoped. The cash-hungry company has taken a number of steps over the past year to cut costs and increase revenue. Most recently, Brinkman auctioned off part of an art collection that dates back to the 1980s, Lesok said. The company said in a bankruptcy filing it intended to sell 11 paintings -- some for at least $5,000 apiece -- on May 3 at Hotel InterContinental in Addison. Several of those were sold, Lesok confirmed, but figures on how much revenue the paintings brought in was not immediately available. Brinkman is in the midst of closing down 10 of its 13 nationwide distribution centers. The company's only Metroplex operations emanate from its 360,000-square-foot Lewisville headquarters site, which will remain open, said Lesok, who added that an unspecified number of Brinkman's remaining 216 employees will be laid off at some point. The company also is trying to sell the only real estate it owns, a distribution center in Oklahoma, Lesok said. Brinkman's management-led buyout team snagged a $6 million loan from Chicago-based Hilco Capital L.P. and a $40 million revolving loan from Congress Financial Corp. last year. The two lenders have asserted secured claims totaling $12 million for the balance of the loans, according to bankruptcy filings.

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