Hali-Spechts Inc., one of the largest lighting store chains in Southern California, has filed for protection from its creditors under Chapter 11 of the federal bankruptcy laws.
The circumstances leading up to the Aug. 14 bankruptcy filing weren't immediately clear.
Hali-Spechts, a 30-year-old chain, has suffered from increased competition over the past several years. Home improvement stores such as Builders Emporium have chipped away at the market for inexpensive lamps, while the Lamps Plus chain has grown to dominate the market for expensive lamps.
In April, Hali-Spechts' owners sold the troubled company to Grate Home & Fireplace, a fireplace store chain based in Fort Worth. The sale price wasn't disclosed.
But Hali-Spechts' former owners retook control of the company on Aug. 6 after Grate Home & Fireplace was unable to refinance a $900,000 credit line from Bank of America. The sale was contingent on Grate's ability to secure new financing.
According to Paul Buxbaum, a consultant to the lighting firm, the bank debt was secured by Hali-Spechts inventory and the personal guarantees of the company's former owners, Alan Specht, Harold Gould and Jules Kates.
Buxbaum said that Grate Home & Fireplace operated Hali-Spechts from April until 12 days ago.
"When the new owners came in, all they could do was file Chapter 11," said Buxbaum. He said accountants were still sorting out the company's finances, and no details were available.
"We are trying to figure out where the money went," he said.
Buxbaum said privately held Hali-Spechts has sales of $16 million to $18 million a year and operates 21 stores, mostly in Los Angeles and Orange counties. Lamps Plus, which is based in Chatsworth, has 21 stores with sales of around $68 million.
Before the sale last April, Specht said he wanted to expand the chain nationally by offering Hali-Spechts franchises.
In Fort Worth, a spokesman for Grate Home & Fireplace said executives were unavailable to comment on Hali-Spechts. Buxbaum said Hali-Spechts expects to continue its operations while it works out a plan to pay its creditors.