Major Retailer Shutters 94 Locations Amid Financial Restructuring

LL Flooring files for bankruptcy, announcing the closure of 94 stores in a significant bid to restructure its operations.

At a Glance

LL Flooring, formerly known as Lumber Liquidators, filed for Chapter 11 bankruptcy.
Company will close 94 out of its more than 300 stores across the nation.
CEO stated bankruptcy is the best path to enhance liquidity.
LL Flooring secured $130 million in debtor-in-possession financing.

Bankruptcy Filed in Delaware

LL Flooring, a leader in the flooring industry, has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. This decision comes as the company faces mounting financial and operational difficulties. The company, formerly known as Lumber Liquidators, seeks to address these challenges by closing 94 stores across the United States.

This move aims to streamline operations and reduce overhead expenses while pursuing a going-concern sale of the business.

LL Flooring CEO Charles Tyson emphasized that the Chapter 11 process is the most effective path to enhance liquidity in light of the challenging macroeconomic environment. To support this restructuring effort, the company secured $130 million in debtor-in-possession financing from a bank group led by Bank of America.

Impact on Employees and Customers

The closures will have a substantial impact on employees and customers who rely on LL Flooring’s services. Approximately 1,960 employees, many of whom are in retail positions, are affected. The company plans to maintain business operations during this transition with over 300 stores and an active online platform.

Gift cards will no longer be accepted after September 3. For a complete list of the stores slated for closure, customers can visit the company’s official website.

LL Flooring plans to continue store closing sales at the 94 locations, and these stores will remain open during the process.

Reasons Behind the Bankruptcy

LL Flooring’s decision to file for bankruptcy follows significant economic challenges post-pandemic. Decreased customer spending on home improvement projects and broader macroeconomic factors, like inflation and rising labor costs, contributed to the company’s financial strain.

By July, a significant portion of the company’s vendors had stopped shipping products or had reduced inventory flow, further impacting their operations. The company also holds nearly $110 million in long-term debt, adding to their financial burdens.

The bankruptcy filing is part of a broader trend, with commercial Chapter 11 bankruptcies rising by 34% in the first half of 2024.

Ongoing History and Rebranding

Founded in 1994, LL Flooring has experienced considerable success, but not without setbacks. A notable controversy arose in 2015 with a CBS “60 Minutes” report on unsafe formaldehyde levels in their products. In 2022, the company rebranded from Lumber Liquidators to LL Flooring to distance itself from these past issues and regain customer trust. Despite these efforts, the post-pandemic economic challenges have proven to be a severe obstacle.

CEO Charles Tyson stated, “As we move through this process, we are committed to continuing to serve our valued customers, and to working seamlessly with our vendors and partners.”

The company remains committed to serving customers and collaborating with vendors and partners throughout the proceedings. They are in active negotiations with multiple bidders and hope to secure court approval for a sale within the initial weeks of the Chapter 11 process.

Despite the significant changes, LL Flooring aims to maintain its presence in the market, ensuring continued service for its loyal customer base.

LL Flooring to close 94 stores as it files for bankruptcy https://t.co/lIlLHcuEwa

— FOX Business (@FoxBusiness) August 13, 2024

Conclusion

LL Flooring’s filing for Chapter 11 bankruptcy and the ensuing store closures mark a significant shift for the company and its stakeholders. With a strategic plan to streamline operations and reduce expenses, the company seeks a more stable and sustainable future. Nevertheless, these changes bring about a notable impact on employees, customers, and the broader market, highlighting the broader economic difficulties faced by many retail companies today.