LL Flooring Files for Bankruptcy, Will Shut 94 Stores Nationwide

A person arrives at the U.S. Bankruptcy Court for the Southern District of New York in New York City on Jan. 9, 2020. Brendan McDermid/Reuters

LL Flooring, a specialty retailer of hard-surface flooring, has filed for Chapter 11 bankruptcy protection and is looking to sell its business after facing liquidity issues.

The bankruptcy request was filed in the U.S. Bankruptcy Court for the District of Delaware on Aug. 11. The company is pursuing a “going-concern sale” of its business, indicating LL Flooring will sell the assets to a buyer while keeping intact all of the things required to continue running the enterprise.

The company, formerly known as Lumber Liquidators, operates about 430 retail stores across 46 states in the United States, Chief Restructuring Officer Holly Etlin said in a court filing.

The business has started winding down 94 underperforming stores, with these outlets expected to be vacated by September. Store closing sales at these locations have already begun. LL Flooring said it could pursue additional store closures.

The firm has received $130 million in financing commitment from a group led by Bank of America, which is expected to help keep the business running during bankruptcy proceedings, according to an Aug. 11 statement.

Etlin said that LL Flooring has faced “multiple setbacks” in recent years which constrained its liquidity and forced the company to eventually file for bankruptcy.

Specifically, Etlin cited a “challenging macroeconomic environment” following the COVID-19 pandemic as a key trigger to the firm’s woes. During the COVID-19 pandemic, the U.S. housing market went into an “overdrive,” she said in the filing.

“With more consumers forced to stay at home due to government-mandated lockdowns, consumers used this time to invest in home improvement projects with the excess cash flow typically spent on entertainment and travel, driving a meaningful increase in demand for flooring and flooring-related products,” the filing reads.

However, after the COVID-19 pandemic, the housing, repair, and remodeling markets were severely hit because of a decline in existing home sales, high interest rates, and an inflationary environment.

“[These factors] drove down home improvement spending and big-ticket discretionary spending, causing a decline in LL Flooring’s volume of transactions and average order size,” the filing reads. LL Flooring also faced several regulatory issues and supply chain disruptions.

“After comprehensive efforts to enhance our liquidity position in a challenging macro-environment, a determination was made that initiating this Chapter 11 process is the best path forward for the company,” Charles Tyson, president and CEO of LL Flooring, said.

“Today’s step is intended to provide LL Flooring with additional time and financial flexibility as we reduce our physical footprint and close certain stores while pursuing a going-concern sale of the rest of our business.”

LL Flooring expects the bankruptcy court to approve the sale of its business within the first few weeks of the proceedings.

According to the bankruptcy petition, the company has from 50,001 to 100,000 creditors. Assets are estimated to be $500 million to $1 billion, with liabilities in the range of $100 million to $500 million.

Retail Bankruptcies

LL Flooring’s bankruptcy is among the many filed by U.S. retailers this year. S&P Global has tracked a total of 21 retail bankruptcy filings through July 16, which is the highest level in the past four years.

Some of the biggest 2024 bankruptcy filings in the retail sector include drug chain Rite Aid, consumer durables and apparel business Careismatic Brands, and home furnishing retailer JOANN Inc.

Overall commercial Chapter 11 bankruptcies rose by 40 percent in July compared with the same month last year, according to an Aug. 5 statement by the American Bankruptcy Institute.

Michael Hunter, vice president of bankruptcy data provider Epiq AACER, blamed the “strong and steady” increase in bankruptcy filings on the “ongoing financial pressures faced by both businesses and individuals.”

“Based on current trends and economic indicators, I expect bankruptcy filing volumes to continue this steady increase throughout the remainder of 2024 and into 2025,” Hunter said.

Insurance firm Allianz Trade notes that bankruptcies worldwide rose by 7 percent in 2023 and are expected to accelerate to 9 percent this year.

While the firm expects bankruptcy numbers to stop rising next year, the figures are expected to remain at a high level in 2025.