, a brand famous
for its reclining chairs and its sister company, contract furniture
source American of Martinsville, have filed for Chapter 11 bankruptcy
protection. Furniture Today reports
that the joint filings were made a little more than a month after the two companies shut down their factory in Martinsville, Virginia. Parent company Hancock Park Capital has agreed to sell the companies to another affiliate of Hancock for $1.5 million. It is the largest unsecured creditor with claims totaling $32.4 million but will waive the claim if the sale to its affiliate is approved. The sale has to be approved by the bankruptcy court which would hold an auction if another bidder is interested.
Papers filed cite the economy and a downturn in furniture sales as a reason for the filing. Hancock Park bought Barcalounger in 2005 and purchased American of Martinsville from La-Z-Boy in 2006. The investment firm shut down Barcalounger's factory in Rocky Mount, N.C., about a year ago and moved production to the American of Martinsville plant. That factory was closed without warning on April 16
. Barcalounge began making reclining chairs in 1940 and now also supplies chairs for home