High-end retailer Robb & Stucky in Chapter 11
Housing downturn hits company's markets
Clint Engel, Furniture Today -- Casual Living, 2/18/2011 4:56:06 PM
TAMPA, Fla. — High-end retailer Robb & Stucky filed for Chapter 11 bankruptcy protection Friday after years of struggling in some of the hardest hit housing markets in the country.
The Top 100 company, which operates large full-line stores and smaller Robb & Stucky Patio units in Florida, Las Vegas, Scottsdale, Ariz., and Plano, Texas, listed both assets and debts in the range of $50 million to $100 million. The 19-store company said it is pursuing a sale of some or all of its assets to investors, but also is entertaining liquidation bids.
Fourteen of the retailer's 20 largest unsecured creditors are home furnishings companies and are owed about $8 million. The largest is Woodard, a casual and outdoor furniture vendor that is owed $1.13 million. High-end case goods and upholstery resource Marge Carson is owed $1.05 million.
Other industry suppliers listed among the largest unsecured creditors and their claims are E.J. Victor, $719, 391; Lexington Home Brands, $656,667; Schnadig, $590,367; Hancock & Moore, $548,388; John Richard Collection, $538,013; Stanley, $477,401; Henredon, $426,994; E.S. Kluft, $407,229; Brown Jordan, $383,890; Leather Trend, $350,713; Vanguard Furniture, $350,028; and Century, $330,719.
In a press release, Robb & Stucky said it made the move was "to stabilize its operations and to facilitate a sale of its assets in Chapter 11."
"At this time, we are focused on charting a path that will lead us into the future," Dan Lubner, president of Robb & Stucky's Hospitality Design Division, said in the release. "We are endeavoring to locate a buyer that will maintain the company's brand standards, associates team and strong focus on customer needs and service, with minimal impact on operations and stakeholders."
The company, which said its troubles stem from the weak real estate market and the decline in consumer spending, said its stores remain open as it navigates the sale process and that it has secured debtor-in-possession financing.
As part of the process, the retailer negotiated a deal with Hudson Capital Partners and HYPERRAMS to serve as the stalking horse bidder and agent for liquidation of substantially all assets, subject to better offers at an auction. The break-up fee under the agreement is $475,000.
Robb & Stucky CEO Clive Lubner and President Fred Berk have not returned calls seeking comment.
In court documents, the retailer paints a picture of mounting debt and weakening sales since the economic downturn begin in 2007.
A declaration by Chief Restructuring Officer Kevin Regan notes that the downturn sharply slowed construction of new homes and purchases of second homes, and that "the national trend toward declining purchase of high-end furniture goods and use of interior design services has significantly harmed and adversely impacted the debtor's business."
It also said the states in which Robb & Stucky aggressively expanded - Florida, Texas, Arizona and Nevada - were among the hardest hit.
In October 2010, Robb & Stucky obtained its most recent round of $3.5 million financing from CIRS Financing. As part of the deal, the retailer brought in FTI Consulting and FTI's Regan as chief restructuring officer.
The same declaration says Robb & Stucky's unpaid principal on revolving credit loans from Bank of America totaled $21.2 million as of Jan. 31, and noted that bank charged the retailer $1 million for default interest and fees Feb. 17.
Other financing debt includes $13.5 million to CIRS Financing and CIRS Managements; and $2.5 million plus interest to Clive Lubner, Fred Berk and others connected to management for a 2009 cash infusion.
Robb & Stucky is No. 33 on Furniture/Today's Top 100 with 2009 estimated sales of $201 million at then 20 stores. That was down nearly 21% from 2008, when the retailer had 26 stores at the end of the year.
According to a court document, revenue for its fiscal year ended June 30, 2010, was $139.7 million, down nearly 50% from the peak revenues of $273.7 million for the fiscal year ended in June 2006.
Last year the company closed the last of its small format stores, a 35,000-square-foot showroom in Southlake, Texas. And earlier this month, its landlord in Scottsdale, Ariz., DMB Circle Road Partners, sued the retailer for allegedly failing to pay nearly $592,000 in rent.