Bankrupt LL Flooring completes $140M asset sale

The bulk of the assets of bankrupt LL Flooring are now in the hands of new owners.

The Henrico-based retailer on Monday finalized the sale of about half of its 400 stores and its intellectual property to founder and former CEO Tom Sullivan, while it also sold its massive Sandston distribution center to data center giant QTS.

Sullivan’s private equity firm F9 Investments took on 219 of LL’s 430 locations in a deal that involved saving the jobs of up to 1,000 of the company’s employees.

In exchange, LL’s bankruptcy estate is expected to receive cash consideration of $40 million-$43 million from F9.

While the Sullivan sale involved LL’s more notable public-facing assets, the sale of the distribution center was far larger.

An entity tied to QTS paid $104 million for the 1-million-square-foot facility at 6115 Technology Creek Drive in White Oak Technology Park in eastern Henrico. It was LL’s most valuable asset.

The sales cap a dramatic six weeks for the company formerly known as Lumber Liquidators, which a decade ago was riding high and trading at more than $100 per share on the New York Stock Exchange.

It collapsed into bankruptcy in mid-August, running short on cash after years of losses and a rebrand that never quite caught on with consumers.

It initially filed for Chapter 11 bankruptcy protection to gain extra time to remain in business and coordinate a sale of its assets, only to change course and announce it would fully liquidate and go out of business completely. But days later it abruptly pulled a U-turn and said it had struck the deal with Sullivan to save many of its stores and employees.

Thomas Sullivan, as seen in a Lumber Liquidators commercial in 2015.

Sullivan founded Lumber Liquidators in New England 30 years ago. He grew the company to its peak, before it was battered by a damning “60 Minutes” exposé in 2015 related to claims of unsafe levels of formaldehyde in flooring it had imported from China and other legal issues. Sullivan left the company a year later in 2016.

He and F9 have been trying for nearly two years to purchase LL, only to be rebuffed at every step prior to the bankruptcy. F9 remains LL’s largest shareholder, though those shares are now nearly worthless in light of the bankruptcy.

While Sullivan could not be reached for comment Tuesday, court filings state that F9 intends to rebrand the remaining stores back to the original name.

“F9 Brands’ focus has been and continues to be restoring Lumber Liquidators as an iconic brand in the flooring industry,” Jason Delves, an F9 executive, said in a filing with the court.

Delves has been tapped to run the newly acquired LL assets for F9. He has more than two decades in the flooring and retail industry, having served as executive officer of various subsidiaries of F9, including Cabinets To Go, Southwind Building Products, LLC and Gracious Homes.

It’s unclear what sort of corporate presence the company will have in the Richmond area going forward, as LL leadership could not be reached for comment by press time.

It has kept its corporate headquarters at 4901 Bakers Mill Lane in the Libbie Mill development in Henrico. LL leases the 53,000-square-foot space from Portsmouth-based Waverton Associates, which purchased the building from local developer Gumenick Properties in 2021.

LL had previously issued layoff notices for 300 workers at the headquarters, though the status of those layoffs and of that office are unclear in light of the sale to F9.

A message left for a Waverton executive was not returned Tuesday afternoon.

One of LL’s two local stores – at 8818 W. Broad St. – is among those purchased by F9 and expected to continue to operate. Not included in the deal and now on the chopping block is the company’s other local store at 9990 Robious Road in Chesterfield. A store-closing sale has already begun there.

The company’s massive distribution center in Sandston is now owned by QTS. (Courtesy JLL)

As for its presence in the Sandston distribution center, LL in its deal with QTS agreed to continue to lease 616,000 square feet in the building for two years. It will pay $334,000 a month in rent for the first year and $345,000 per month in the second year. That amounts to $8.1 million over the course of the lease.

F9 said it eventually plans to move LL out of the Sandston building into a new-construction distribution center it plans to erect on land next door to F9’s existing distribution center in Tennessee.

Its unclear what QTS has planned for the property and its 97 acres. The data center giant already has a major presence in White Oak Tech Park and plans to build additional square footage elsewhere nearby.

The other 1,000 LL employees who are not being hired by F9 are expected to be laid off. The remaining 211 LL stores that are not being purchased by F9 will be liquidated in closing sales that are ongoing.

The company’s Chapter 11 bankruptcy process will continue after the closure of the sales, as F9 has created new entities with which to operate the assets it is acquiring.