Bankruptcy filing reveals what went wrong for Art Van Furniture
WARREN, Mich. – Art Van Furniture’s chapter 11 bankruptcy filing became official Monday, and it shed some light on what caused the demise of the prominent Metro Detroit business.
The bankruptcy was filed in Delaware. The 22-page filing told the story of a once-proud retailer crashing into the rocks.
The lines formed before the 2 p.m. closing at Art Van stores -- including the one in Southfield and at headquarters, where things got out of hand last week, causing stores to close and reboot.
Meanwhile, Art Van’s executive vice president and CFO David Ladd wrote the filing.
It’s notable that he came to bankrupt hedge fund owned Art Van after a long stint working at bankrupt hedge fund owned Sears and Kmart.
He told the bankruptcy court extreme market conditions such as reduced foot traffic, internet shopping, an $8 million tariff bill last year and very tough competition led to negative year-to-year sales.
The fact the board ordered management changes and a cascading impact of reduced or cut credit lines led to this line: “The company is simply unable to meet its financial obligations.”
Many Michigan companies are taking a major hit. Sussman Agency of Troy ran Art Van’s advertising and is owed nearly $8 million.
Monroe’s La-Z-Boy is out $5 million, and Serta, of Romulus, is owed nearly $2 million. In all, Michigan companies are out a total of $20 million.
To hear from bankruptcy expert Doug Bernstein, watch Rod Meloni’s full story in the video above.
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