Home furnishings retailer Levitz Furniture has filed for Chapter 11 bankruptcy protection in an effort to stay in business despite a lack of cash.
The company's request for reorganization under court protection is part of a strategic effort to evaluate its options, including a possible sale, the privately held company said. It is the third time Levitz has sought court protection in just over 10 years.
The New York-based company -- known in many corners of the country for its "You'll love it at Levitz" slogan -- asked the court for approval to continue meeting obligations such as fulfilling customer orders and paying its staff, and that it be allowed to pay for goods and services further down the road.
"We are hopeful this filing will enable the business to emerge stronger and better positioned for long-term success," Chief Executive Larry Zigerelli said in a statement Thursday. "We have an exceptional group of people at Levitz who have made great strides to improve our business during a challenging period for our entire industry."
Along with home builders, construction suppliers and financial firms, the furniture business has been hit by the double whammy of harder-to-get mortgages and a downturn in home sales. Forecasters expect U.S. consumer spending on furniture and bedding to grow by just 1.5% this year, making it the industry's worst showing since 2001, according to a projection compiled by the trade journal Furniture Today.
Levitz, previously known as Levitz Home Furnishings Inc., filed for Chapter 11 protection in September 1997 and emerged in February 2001. During another entry into bankruptcy in October 2005, it closed about 35 stores in the Northeast, California, Minnesota and Arizona.
Prentice Capital Management and Great American Group acquired the reorganized company in 2005, and Prentice, along with other investors, still holds a large stake.
Levitz said it had struggled financially since its reorganization, and despite shareholders' injections of almost $200 million it continues to operate at a loss. It is able to borrow money only under certain conditions, and as a result "has from time to time and recently been unable to make timely and complete payment to vendors," according to court documents.
Filings show that the company owes suppliers at least $28 million.