Linwood Furniture is no more as a judge in U.S. Middle District Bankruptcy Court approved converting the company from a Chapter 11 bankruptcy to Chapter 7 after a hearing Wednesday afternoon.
After filing for Chapter 11 bankruptcy in March and attempting to reorganize the company, Linwood executives took the next step and put the company up for public auction Aug. 9. The company noted that it had $6.9 million in debt but only $3.7 million in assets.
The minimum bid in the auction was $2.56 million, but no bids were received.
The company ceased production in the middle of August with about 75 employees being placed on furlough. Only a small staff was retained to do custom finishing and shipping of in-stock items. After the approval of the Chapter 7 conversion by Judge Catharine Aron, the remaining employees will be let go.
C. Edwin Allman of Allman Spry Leggett and Crumpler, P.A. said the employment will likely end Thursday. Allman was chosen as the trustee for Linwood to ascertain how the company will liquidate its assets.
Jeff Schwall, president and chief executive of Linwood, could not be reached for comment.
Robert Price, a staff attorney with the U.S. bankruptcy administrator's office in Greensboro, said the debtor is not operating, and any final issues were winding up. Price noted to the judge that the company tried to reorganize and then sell the company, but both attempts were unsuccessful.
Representatives with Linwood were not present at the hearing, but Price said that he did not believe that the debtor contested the motion to move the company from Chapter 11 to Chapter 7. While the company did turn a profit in June to the tune of more than $46,000, it lost just over $78,000 in July.
Linwood formed in 2006, to mainly make World of Bob Timberlake collection locally after Lexington Home Brands wanted to shift production overseas. The licensing agreement between Timberlake and Linwood ended in 2010, although Linwood continued to make some Timblerlake items; Century Furniture made most of the line.
When the company filed for bankruptcy, it wanted to reduce its debt and place more of an emphasis on residential furniture.
The judge also heard from David Meschan, attorney for Kimball Hospitality Furniture, on the settlement between Linwood and Kimball. Linwood terminated its contract with Kimball when it went into bankruptcy. Meschan said it was the wishes of the company to wait for the trustee review before settling.
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