By Dennis Seid
Lane Furniture Industries could lay off more than 1,400 workers across Northeast Mississippi next month.
Lane’s parent company, St. Louis-based Furniture Brands International, on Monday filed for Chapter 11 bankruptcy protection, which allows the furniture manufacturer and importer to reorganize its finances.
Furniture Brands said it plans to sell most of its assets, which includes Broyhill, Thomasville, Drexel Heritage, Maitland Smith and others, to investment firm Oaktree Capital Management.
As for Lane, Furniture Brands said it was looking at “sale alternatives” for Lane and said it had received interest from potential buyers. At the same time, Furniture Brands also filed notice with the Mississippi Department of Employment
Security that it expected to begin 1,451 layoffs at its Lane locations on or before Oct. 14.
However, a communications firm brought in by Furniture Brands, ICR, told Furniture Today a final decision has not been made on the layoffs.
In a company memo to Lane employees, Furniture Brands said, “At this time there are several interested parties who have indicated strong interest in acquiring the business. However, a sale is not guaranteed, and we are exploring our options for Lane at this time.”
Meanwhile, company officials said the Chapter 11 filing won’t affect day-to-day operations, and “we expect to operate business as usual.”
Lane has manufacturing plants in Saltillo and Belden, offices in Verona and a distribution center in Wren.
Oaktree is providing Furniture Brands a $140 million debtor-in-possession, or DIP, loan to finance the bankruptcy case.
“After careful consideration of a range of alternatives, we firmly believe that our Chapter 11 process represents the best long-term solution for Furniture Brands to address its liquidity challenges, strengthen its operations and continue to provide our customers with the highest-quality products and services that they have come to expect from us,” said Furniture Brands Chairman and CEO Ralph Scozzafava. “Our portfolio includes some of the most well-respected brands in the furniture industry, and we are pleased to be partnering with Oaktree. … We are highly confident that as a result of these actions, we will protect our valuable franchise and emerge as an even stronger company.”
Tupelo-based Community Development Foundation said it was working with several agencies in the event of layoffs.
CDF and Three Rivers Planning & Development District, through the Mississippi Partnership Local Workforce Investment Area, have applied for a National Emergency Grant to provide training and re-employment services to help workers find new jobs in the community. Workers will receive career counseling assistance, job-search assistance, and on-the-job training, among other re-employment services.
MDES chief of workplace services Gloria Neal said she has contacted Furniture Brands to ask about setting up Rapid Response Services, which provide training and support services. CDF and Three Rivers will coordinate their work with
MDES, as well as Itawamba Community College and other state and local agencies.
“We can meet workers on site, or we can meet off-site,” she said. “We’re just waiting to hear from the company.”
The company’s fortunes have fallen dramatically in recent years. Furniture Brands as early as the mid-2000s was the nation’s largest furniture company, with more than $2.4 billion in sales. But it hasn’t posted a profit since 2006, and last year, sales were just over $1 billion.
Two months ago, it announced it had recorded another $40 million quarterly loss. It had tried to boost its shares with a 1-for-7 reverse stock split in May, but after a brief spike, the stock continued to fall. Last month, it voluntarily delisted from the New York Stock Exchange and moved to an over the counter market.
On Monday, shares of Furniture Brands closed at 30 cents, down 26 cents.