Virginia-based LL Flooring, a specialty retailer of hard-surface flooring, has decided to liquidate its businesses after attempts to secure a buyer as part of bankruptcy proceedings failed.
Chapter 11 rules require that the company secure the highest or the best offer for its businesses or assets. However, the company said that “discussions have not resulted in an offer, with the necessary financing, that would maximize the value of LL Flooring.”
As a result, the company will sell off individual assets, run closing sales in stores, and wind down the business to “deliver the most value to its creditors.”
“LL Flooring is planning for closing sales to begin at all of its remaining stores on September 6, 2024,” it said. “We expect the store closure process to be completed in approximately 12 weeks, with the timing of closures varying from store to store.”
The company, formerly known as Lumber Liquidators, operates about 430 retail stores across 46 states in the United States. It had already started winding down 94 underperforming stores when the bankruptcy was filed, with these outlets expected to be vacated by September.
In a court filing, Chief Restructuring Officer Holly Etlin said the company faced “multiple setbacks” in recent years that negatively impacted the company’s liquidity.
After the pandemic-fueled housing market boom ebbed down, the home improvement market took a hit, leading to a “decline in LL Flooring’s volume of transactions and average order size,” the filing stated. The firm eventually decided to file for bankruptcy after being unable to resolve the liquidity crisis.
Rising Bankruptcy Filings
LL Flooring is one of the latest firms operating in the furniture sector to go bankrupt over the past year. In October 2023, home decor retailer Z Gallerie initiated store closing sales as part of its Chapter 11. Z Gallerie was acquired by home furnishing business Karat Home in January.Similarly, furniture and appliance retail chain Conn’s Inc. filed for bankruptcy in July of this year, initiating store closing sales that month.
According to a report from S&P Global, there were 392 corporate bankruptcy filings in the first seven months of this year across all sectors, the highest since 2020 and the second highest since 2011.
“U.S. corporate reorganizations have risen in response to higher interest rates, which have remained at roughly 20-year highs for the past year, rising geopolitical uncertainty, and an overall economic cooling,” said the report.
S&P does not track all bankruptcies but only those that meet certain high asset and liability thresholds. Some of the biggest bankruptcies so far this year that involved more than $1 billion in liabilities include Invitae Corp, Dynata LLC, Red Lobster Management LLC, and Conn’s Inc.
The consumer discretionary sector, which includes firms selling nonessential goods, saw the highest number of bankruptcy filings at 60. This was followed by industrials, health care, consumer staples, information technology, financials, and communication services.
The American Bankruptcy Institute reported an 8 percent annual increase in overall commercial filings in August.
Michael Hunter, vice president of bankruptcy data provider Epiq AACER, noted that “August new filing volumes remained relatively flat month-over-month to end the summer while year-over-year volumes continue to show a steady increase.”
“As delinquency rates increase in many domains, debt levels continue to grow, [and] high interest rates remain intact with relatively flat household income, we expect continued increases in new filing volumes this fall and into the winter of 2024,” he said.
