Glenoit to exit Ch. 11
Cecile Corral -- Casual Living, July 22, 2002
Almost exactly two years to the date since Glenoit Corp. was forced to file a pre-packaged Chapter 11 bankruptcy plan to wipe the slate clean of $95 million in corporate bonds, the company is now on its way to recovery.
Glenoit Corp. expects to emerge from bankruptcy proceedings within the next 60 to 90 days under the ownership of its current lenders and through a reorganization plan that calls for the company to be led by its current management team.
In the next 10 days the company will file its reorganization plan with the bankruptcy court. Approval is projected for September.
Barry Leonard, president of Ex-Cell Home Fashions, Glenoit's home fashions division, told Home Textiles Today the company had "different offers" from prospective buyers during the course of the past two years.
But in a company-issued press release, Glenoit Corp. stated, "It was decided that the best course of action was to bring Glenoit out of bankruptcy through a reorganization plan spearheaded by management and supported by Glenoit's current lenders."
Earlier this year, in an effort to focus on its more profitable product lines — namely the bath products, table linens and decorative pillows by Ex-Cell, as well as the accent and scatter rugs by its Glenoit Consumer Products division — Glenoit Corp. sold off its specialty fabrics division to Shanghai Haixin Group of Hong Kong for more than $14 million in cash. Prior to that, in late 2001, the company sold its American Pacific home furnishings division back to its original owners for approximately $28 million in cash and other considerations.
Glenoit Corp.'s last reported fiscal year was 1999, when the company recorded sales of $294.7 million and a loss of $13.3 million.
During that period, the majority of sales were generated by the home fashions business division, with $221.8 million of the total sales.
And of that sum, Ex-Cell and American Pacific together contributed $167 million. The remaining $54.8 million was generated by the company's existing decorative pillow division.
But just as home fashions proved to be the company's gold star, its fabrics division continued to slide, dipping to $74.6 million in 1999 from $107 million in 1997.
In August 2000 when Glenoit Corp. filed its pre-packaged Chapter 11 bankruptcy plan, it was under the leadership of Tom O'Gorman, then the president. O'Gorman, who died earlier this year, has been called the architect of the company's diversification plan into home fashions beginning in 1998, a strategy that ensured the continued existence of Glenoit Corp.
The company's last reported sales and earnings were for the third quarter of 2000. Glenoit Corp. recorded during the first nine months of that year sales that had increased by 17.2 percent to $260.3 million and a profit loss that had been reduced by more than half, to $3.9 million from $9.3 million in 1999.
Home fashion sales for that same nine-month period shot up by 29.9 percent, to $208.6 million from $160.5 million in 1999.