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- ABC may tap part of $5.7 million loan to fund operations
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(Reuters) – Luxury furniture retailer ABC Carpet & Home on Friday secured court approval to tap part of a $5.7 million loan to fund operations while it is in bankruptcy.
During a virtual hearing, U.S. Bankruptcy Judge David S. Jones in Manhattan approved access by the company, which is being represented by Greenberg Traurig, to $2.25 million of the loan on an interim basis and will consider the remainder later this month.
The New York-based company filed for Chapter 11 protection with plans to sell its assets on Wednesday with about $8 million in secured debt and another $80 million in unsecured debt. The company blamed the effects of the COVID-19 pandemic for its troubles, including the flight of many prospective customers who left New York. The bankruptcy is notable in a year with few retail Chapter 11s compared with 2020, when giants such as J.C. Penney and Neiman Marcus sought bankruptcy protection.
The company is looking to sell its assets by the end of October and has lined up a $15.3 million lead bid from 888 Capital, an entity controlled by Regal Investments. ABC owner Paulette Cole, the great-granddaughter of the company’s founder, holds a minority interest in 888 Capital.
888 Capital is also providing the bankruptcy loan.
In addition to weathering the pandemic, ABC had been hit in recent years by the market shift toward online shopping as well as construction delays related to its flagship New York location, according to court papers. The company brought in $25.46 million in revenue from Jan. 1 through July 31, down from $59.1 million for that period during 2017.
Though ABC expanded over the past several decades, opening stores in Florida and London, it has since had to scale back to its two New York locations in Manhattan and Brooklyn. ABC Kitchen, the restaurant located next to the ABC Carpet flagship in New York, also is owned by Cole but is not part of the bankruptcy and will not be part of the sale.
A significant chunk of the company’s unsecured debt is owed to Cole, who provided a $40 million unsecured loan to keep ABC afloat prior to the bankruptcy. Another $15 million unsecured loan is owed to Northern Trust.
“It’s really important for the court to know Ms. Cole and her family have devoted their lives and treasury to this iconic business and brand,” Cole’s lawyer, Michael Sirota of Cole Schotz, said during Friday’s hearing.
In addition to approving interim access to the loan, Jones approved ABC to make payroll and satisfy certain customer obligations.
The case is In re A.B.C. Carpet Co. Inc., U.S. Bankruptcy Court, Southern District of New York, No. 21-11591.
For ABC: Oscar Pinkas, Sara Hoffman and Ari Newman of Greenberg Traurig
For Cole: Michael Sirota of Cole Schotz
For Northern Trust: Katie Catanese of Foley & Lardner
For 888 Capital: Lori Schwartz of Robinson Brog Leinwand Greene Genovese & Gluck