Atlanta, GA, November 5—Rhodes Furniture said it has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
The company said it has identified 26 store locations and five related support operations that will be closed as a part of its restructuring. The company expects to reorganize its business around the remaining 63 stores.
Rhodes said that normal operations and customer service will continue without disruption, including sales, order processing, and delivery. The company said it had secured an $88 million debtor-in-possession (DIP) financing facility from Wells Fargo Retail Finance.
The company said it anticipates that the DIP financing, together with its ongoing revenue stream, will be sufficient to fund its operations, including payment of employee wages and benefits, during the reorganization process.
"After careful consideration we concluded that a Chapter 11 restructuring represents the best long-term solution for Rhodes Furniture," said Steven S. Fishman, president, CEO, and chief restructuring officer. "It is our goal to reach an agreement with our creditors in a quick and efficient manner, allowing us to restructure our debt and close underperforming stores with minimal disruption to our operations."
The company said the restructuring will allow it the opportunity to address the financial issues presented by the operation of unprofitable stores. The restructuring will allow the company to reduce its debt levels, improve its balance sheet, and align its business strategy and operational structure with the current climate and market conditions.
The company has not set a target date for emergence from Chapter 11, but Fishman stressed that the company's strategy is to move quickly. "There is much work ahead," he stated, "but time and time again, our employees have proven their ability to face significant challenges and handle change.
Rhodes, Inc., headquartered in Atlanta, Georgia, is one of the largest furniture retailers in the country, offering brand-name residential furniture to middle- and upper-middle-income customers through 89 stores located in 13 southern and midwestern states.
