Rhodes Furniture files Chap. 11

Atlanta-based retailer Rhodes Furniture has filed for Chapter 11 bankruptcy protection, owing at least $16.8 million to its top industry and other unsecured creditors — from suppliers to former CEOs. The company plans to close 26 stores while its other 63 stores will remain open and operations will continue "without disruption," according to the company.

Rhodes filed Nov. 4 in U.S. Bankruptcy Court for the Northern District of Georgia's Atlanta Division, ending speculation about the fate of the Top 100 furniture company that has been swirling around the industry since before the October High Point market.

According to a court filing listing the Top 30 unsecured creditors, the largest industry creditor to the 89-store retailer is Berkline/BenchCraft. The two furniture manufacturers under common ownership are listed separately, but the combined claim totals $2.7 million.

Also listed among the creditors is New York-based Lifestyle Holdings, with a $17.8 million claim connected to a loan. Three other industry suppliers — Jackson Mfg., Bauhaus and Albany Inds., are owed more than $1 million as well as former Rhodes CEO Irwin Lowenstein, whose nearly $1.6 million claim is listed as "non-qualified pension."

Mississippi-based Stylecraft Lamps is listed as one of the major creditors and is owed $173,411 by Rhodes, according to the court filing. Stylecraft National Accounts Manager Ed Logan said Rhodes actually owes nearly double that amount as of press time, but the promised checks were in the mail and had not been received.

"We'll survive it, of course nobody likes to lose money and it comes right off the bottom line, but it's not going to break us," Logan said.

Logan referred to a mid-September meeting Rhodes had called with its key vendors in which new CEO and President Steven S. Fishman sought to dispel rumors and reassure them of its solid financial position. "It ended up that what they portrayed at the meeting and what has happened to date was not quite accurate," Logan said. "It's a disappointment they would bring us in to reassure us of their stability and six weeks later file bankruptcy."

Jim Archibald of Carolina Mirror said Rhodes is a customer of the North Wilkesboro, N.C.-based company but at this time "Rhodes does not owe us any money. We are waiting for further confirmation of the bankruptcy filing details though."

Rhodes says it has obtained $88 million in debtor-in-possession financing from Wells Fargo Retail Finance.