January 16, 2023
Judge to rule on United Furniture’s bankruptcy
A federal judge will rule Wednesday on whether to approve the Chapter 11 bankruptcy protection motion of United Furniture Industries Inc.
Judge Selene Maddox conducted Friday a hearing on United’s Chapter 11 motion which would focus foremost on how the sale of its assets would be handled.
Maddox chose not to address the Chapter 7 liquidating motion filed Jan. 6 by Wells Fargo & Co., United’s largest creditor.
Maddox took Friday’s presentations “under advisement,” pending issuing a bench ruling at 4 p.m. Wednesday.
Maddox also chose to reset Wells Fargo’s motion for an interim bankruptcy trustee pending a ruling on the United motion.
The United motions are the company’s first formal legal response since it unexpectedly shut down on Nov. 22.
The shutdown immediately ended the employment and health insurance benefits of about 530 Triad workers and about 2,700 overall in three states.
Wells Fargo claims United’s motion “is an exercise in revisionist history” and only benefits the manufacturer’s majority owner, David Belford.
Wells Fargo said in a Dec. 30 court filing requesting the Chapter 7 liquidation of United that it is owed $99.21 million in secured debt.
However, the bank acknowledged it “estimates that any recoveries from liquidation of (United’s) collateral will result in a recovery equal to a fraction of this amount.”
United made promotional- to mid-priced upholstered furniture in the U.S. under its brand and the Lane Home Furnishings brand. The manufacturer also imported wooden bedroom and dining furniture.
Wells Fargo has pulled no punches in its court filings.
It claims United has performed post-shutdown “various instances of conduct found to establish a lack of integrity,” “gross mismanagement,” “ongoing incompetence,” and “conflicts of interest” involving Belford, and “lack of credibility and creditor confidence.”
Belford made the decision to shut down United.
United claims Wells Fargo’s motion for an interim trustee was filed “solely to hinder the company’s liquidation plan” and that “there is zero proof whatsoever of fraud, dishonesty or gross management” by United’s owner, board of directors or executive team.
United said it hired Kimberly Harper as chief financial officer on Dec. 1 to lead its attempt to “wind down the company … to preserve the company’s assets, prevent loss to the estate and develop a strategy to maximize the company’s value to all stakeholders.”
Those steps involve Harper negotiating with creditors and handling human resources issues. United cited the hiring of a chief restructuring officer and an outside general counsel.
As such, United claimed that the Wells Fargo motion for an interim trustee is unnecessary.
More salacious info here: https://nypost.com/2023/01/04/united-furniture-lenders-reveal-chaos-surrounding-2700-layoffs/