Owners of Richmond Retailer Battle Over Dissolutio

Richmond, VA, September 10--The Mercer Rug and Carpet Sales Inc. business might be fading away. The owners of the 35-year-old Richmond business are feuding over company operations, according to the Richmond Times-Dispatch. Both sides have agreed the retail business should be dissolved, but they can't agree on how it should be done. The dispute and possible liquidation does not affect Mercer Rug and Carpet Cleaning Inc., a separate business with an owner in common. George R. Mercer Jr., son of the co-founder of Mercer Rug and Carpet Sales, asked a Richmond Circuit Court judge to decide the fate of the flooring retailer. Judge Melvin R. Hughes Jr. appointed a custodian last week to determine how the business should be liquidated. A report by David K. Spiro, a Richmond lawyer serving as custodian, should be completed by Tuesday. Spiro declined to comment. The showroom remains open for the time being. "We think what the judge did was great," said John K. Burke Jr., an attorney in the firm of Troutman Sanders, who represents George R. Mercer Jr. Mercer and company co-founder George R. Mercer Sr. jointly own 50 percent of the company. The son owns a third of the company, court papers show. The elder Mercer, 94, is in poor health, according to court documents. He is not a party to the lawsuit. Gary D. Armstrong, whose father started the business in 1969 with the senior Mercer, owns the other half of the company. "We are trying to work through this to the best interest of the shareholders and the corporation," said E. Duffy Myrteus, an attorney with Kaufman & Canoles who is representing Armstrong. "We are trying to explore alternatives for the parties involved." Armstrong took over as company president in 1989 after his father's death. "The company, which was formerly managed by Armstrong's father, was for many years a profitable company, and Mercer and his father received substantial income on an annual basis as a result of the company's operations," according to the lawsuit that the younger Mercer filed. "The company's fortunes began declining after Armstrong succeeded his father as president of the company, and neither Mercer nor his father have received any income from the company for over five years," the lawsuit said. Mercer Rug and Carpet had three locations at one time -- on Moore Street, on Midlothian Turnpike in Chesterfield County and in Charlottesville. Only the original showroom on Moore Street remains. The lawsuit claims the company's assets are being misapplied or being wasted. It also claims that extraordinary salaries were paid in January that far exceeded annual amounts paid in previous years. (Armstrong deposited $150,000 in his lawyer's trust account until that dispute is resolved.) The dispute contends that Armstrong has not provided Mercer with an accounting of the company's finances. It states that the Charlottesville store, which closed last year, generated $1.256 million in the final three months of 2003, compared with sales of $696,000 for all of 2002. Mercer wants a quick liquidation of the company's remaining inventory. Armstrong favors a more drawn-out process that would require hiring a liquidation company to conduct a larger sale. Spiro will recommend to the judge which liquidation plan should be used at the Mercer Rug and Carpet Sales business. The retail business and Mercer Rug and Carpet Cleaning are neighbors on Moore Street. The carpet-cleaning business was created in 1938 by the senior Mercer. Mercer Sr. owns it with his daughter, Mary Rutherfoord. Her son, Rutherfoord Ferguson, runs the business as executive vice president and general manager.