Breuners' bankruptcy ripples through industry

Breuners Home Furnishings Corp., Lancaster, Pa., filed for Chapter 11 bankruptcy protection July 14, and while 29 home furnishings companies, owed a total of $20.5 million, are among the 33 largest unsecured creditors, companies across the home accent industry are feeling the effects.

Home accent vendors listed in the filing as unsecured creditors include Arteriors, Art Max, Austin, Bard International, Carolina Mirror, Cooper Classics, Creative Images, Dale Tiffany, Distinctive Designs, E.J. Victor, Elliot's Designs, Fine Art Lamp, Fourbro Frames, Frederick Cooper, Global Views, Horizons, Howard Miller Clock, Interlude, Magnussen Home, Maitland-Smith, McCreary Modern, Montaage, Murray Feiss, Nova Lighting, Palecek, Raschella Collection, Remington Lamp, Robert Abbey, Sedgefield by Adams, Southern Textiles, Stein World, Toyo, Two's Company, Wesley Allen, Wilco Imports and Woodmark Originals.

"Anytime you lose money it affects you," said Pauline Rashella, president of Raschella Collection. "We're OK though; fortunately it wasn't a bigger loss. The sad part is how it's felt throughout the industry. We lost an order because our customer had to pay back a deposit to her customer on furniture that was not delivered because the manufacturer, a supplier of Breuners, had been hit."

Carolina Mirror director of sales Jim Archibald said though they'd done a "decent business with Breuners in 2003, they had seen a drop-off in orders." Carolina Mirror is owed between $5,000 and $10,000 from past due invoices from the winter, but Archibald said the bigger loss is "running out of mid-sized majors, particularly in the Philadelphia area."

This sentiment mirrors that expressed by Bob Maricich, president and CEO of Century, owed $380,000, in a recent Furniture/Today article. He said the loss "will shrink an already tight high-end market" and while that might create opportunities for manufacturer-dedicated stores, "for someone like us that has chosen to align with strong upper-end retailers in local markets, that makes it a tougher situation."

"It's really an injustice if a store or company knows it's in trouble and it continues to order," said Alan Palecek, president of Palecek. "It's become commonplace for companies to file bankruptcy today, and it's not viewed as being disgraceful like it once was. The long-term repercussions fall on the creditors and consumers rather than the debtor."

So far the filing has been fatal to one manufacturer, J. Royale. The 18-year-old upholstery company shut down, putting 82 employees out of work. Breuners accounted for half the company's business, and President and Co-founder John Jones III said, "The ripple effect of what Breuners did is huge, just huge. It's not a ripple; I'd say it's a wave. I'm trying to find some humor in this."

The trustee in the bankruptcy case recently named a seven-member committee of unsecured creditors, but so far there is no information as to whether there will be funds available for unsecured creditors. There is a bid, subject to bankruptcy court approval, to conduct a going-out-of-business sale.

As for plans to liquidate the 47 stores, including 17 Good's Furniture stores in Pennsylvania, New Jersey and Delaware and 20 Huffman Koos stores in New York, New Jersey and Connecticut. (all leased buildings) as well as Breuners stores in California, another Top 100 retailer, Havertys, might be interested.

"We'll be looking at whatever (stores) become available," said Clarence Smith, Havertys president and CEO, in a conference call on the company's quarterly earnings.

Smith didn't say which stores Havertys might be interested in, but said with the company's current distribution network, "we could certainly get into Pennsylvania. It can also reach Delaware," he said, "although New Jersey would be a stretch without another cross-dock facility."