ST. LOUIS — Furniture Brands International Inc. said Monday it has filed for Chapter 11 bankruptcy protection and hopes to sell the bulk of its business to investment firm Oaktree Capital Management.
The St. Louis company runs the Thomasville chain of furniture stores and owns furniture brands such as Thomasville, Broyhill, Lane, Drexel Heritage and Lane Venture.
Furniture Brands, like many companies, struggled with weaker sales due to the housing market collapse and weak consumer spending. But unlike some of its peers, it has not rebounded with the housing market.
The company reported in August it widened its fiscal second-quarter net loss to $40.8 million on weaker revenue and major charges to write down the value of its brands. It also said that it would cut costs and pursue the sale of some of its assets.
CEO Ralph Scozzafava said Monday Furniture Brands determined filing for bankruptcy protection was the best way to address its liquidity challenges and strengthen its operations.
The company, which filed with the U.S. Bankruptcy Court in Delaware, said it has reached an agreement to sell it nearly of its assets, except the Lane brand, to Oaktree under an auction process. The court must approve the plan and other bidders may emerge.
Furniture Brands said Oaktree will provide $140 million in debtor-in-possession financing, which is also subject to court approval. The company said the financing will enable it to operate its business uninterrupted and meet all its financial obligations, such as employee wages.
The company also said that it is considering the sale of its Lane business and has received several “indications of interest” from potential acquirers.
Shares of Furniture Brands fell almost 47 percent to close at 30 cents Monday. Its stock value has been falling fairly steadily since 2002, when it approached $300.