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The 126-year-old brand name for Dan River Inc.'s home furnishings wasn't enough to let it bypass the worst U.S. housing crisis since the Great Depression. The Danville, Va.-based company is the latest of several battered home furnishings makers that are confronting sagging sales in the midst of the ripples from the subprime mortgage fiasco.
The list of ailing home furnishings makers extends from Bombay Co., Levitz Furniture Inc., Sofa Express Inc. all the way to Linens 'n Things Inc,, which reportedly is near bankruptcy. Even retail giants Wal-Mart Stores Inc. and Target Corp. are calling the sector their weakest for sales as of late. Those problems are compounded by the loss of market share that Dan River undoubtedly faced from its first Chapter 11 and the $143 million in exit financing that it carried from Abelco Finance LLC and its bondholders two years ago. "It's really tough when you're trying to turn a company around, and then it's also in the weakest sector of the market," said David Davidowitz, chairman of retail consultant Davidowitz & Associates Inc. in New York. "I can't see them doing anything else but liquidating this time around." While Dan River filed only a skeletal Chapter 11 and counsel Whiteford, Taylor & Preston LLP didn't return calls, The Danville Register & Bee is quoting laid-off workers who report that the shop has shut down for all but a handful of employees. Dan River filed its Chapter 22 electronically on Sunday in U.S. Bankruptcy Court for the District of Delaware in Wilmington but only filed one document and had yet to seek first-day motions. The firm had posted $600 million in revenue in 2000 before some 7,000 jobs were lost over the past four years and 90% of its assets were sold out of its first bankruptcy to Gujarat Heavy Chemicals Ltd. of India. GHCL planned to shift its production to India, Pakistan and China to cash in on its cheaper labor after the deal for $17.5 million in cash and $76 million in assumed debt closed two years ago. Albert "Buddy" Rawley, who worked at Dan River for 29 years until 2004, called the closing of the former home furnishings giant "a very sad time," in The Register & Bee. "It was a great company to work for when I was there." An employee who picked up the phone said, "There's still some people around," but declined further comment. Dan River officials didn't answer the phone Monday. - Terry Brennan See the full story from TheDeal.com Categories Deal Video
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