LL Flooring Files for Bankruptcy, Shutting Down 94 Stores Nationwide

A person arrives at the US District Bankruptcy Court for the Southern District of New York in Manhattan, on Jan. 9, 2020. (Brendan McDermid/Reuters)

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

The Chapter 11 bankruptcy request was filed in the U.S. Bankruptcy Court for the District of Delaware on Sunday. 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 operates around 430 retail stores across 46 states in the United States, Holly Etlin, chief restructuring officer, 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 press release.

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, Eltin cited a “challenging macroeconomic environment” following the COVID-19 pandemic as a key trigger to the firm’s woes. During the 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.”

However, post-pandemic, the housing, repair, and remodeling markets were severely hit due to a fall 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 said. LL Flooring also faced several regulatory issues as well as 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,” said Charles Tyson, president and CEO of LL Flooring.

“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 between 50,001–100,000 creditors. Assets are estimated to be between $500 million and $1 billion, with liabilities in the range of $100 million to $500 million.

Retail Bankruptcies

LL Flooring’s bankruptcy is one 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 among 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 press release 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.”

Insurance firm Allianz Trade notes that bankruptcies worldwide rose by 7 percent last year and are expected to accelerate to 9 percent in 2024.

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