Specialty home improvement retailer LL Flooring said this week it is going out of business and closing all of its stores after failing to buyer following a Chapter 11 bankruptcy filing last month.
Despite negotiating with bidders to pursue a going concern sale, the company received no offers. The retailer cited Chapter 11 rules that require it to obtain the highest or best offer for the business assets. With no offers tendered, LL Flooring said it determined liquidating and selling its assets individually would deliver maximum value to creditors.
“As a result, it is with a heavy heart that we must let you know that we are going to begin the process of winding down LL Flooring’s business and closing all of our stores. This is not the outcome that any of us had hoped for,” CEO Charles Tyson said in open letters to customers and vendors. Closing sales are expected to begin Friday and conclude by Nov. 30, according to a recent 8-K form filed with the U.S. Securities and Exchange Commission.
LL Flooring filed for Chapter 11 on Aug. 11 in the U.S. Bankruptcy Court for the District of Delaware. At that time, LL Flooring said it had liabilities of $100 million to $500 million, assets of $500 million to $1 billion and debtor-in-possession financing of $130 million from its lenders. At that time, it also announced the closure of 94 stores.
In court documents, the company attributed its business hardships to reduced consumer spending on home improvement, decreased discretionary buying and declining demand in the sector after the height of the pandemic. As the company’s financial situation deteriorated, it cut back on vendor and supplier payments as a way to manage liquidity. Vendors, in turn, withheld shipments or cut their flow of inventory to the retailer, exacerbating the situation.
The retailer has amended its contract with retail liquidator Hilco to handle all of the store closing sales, according to the SEC filing. The company plans to sell its Sandston, Virginia, distribution center for about $105 million. At the time of its bankruptcy filing, the company employed about 1,960 people and operated about 430 stores.
As a result of the decision to cease operations, LL Flooring said in its letter to vendors that it has stopped buying most goods and services except for those it believes are necessary to support the wind-down of its business operations.
Founded in 1994 as Lumber Liquidators, a 2015 investigative report by CBS’ “60 Minutes” alleged imported laminate flooring from China contained unsafe levels of formaldehyde. The company said the news report’s negative publicity also hurt the business. It pleaded guilty in federal court to environmental crime and false statement charges and settled state-level and class action lawsuits related to the issue. It completed a rebranding to LL Flooring in 2022.
