by Bankruptcy court will hold hearing Friday to appoint trustee in involuntary filing
TUPELO, Miss. — Today’s anticipated hearing to appoint a trustee in the involuntary Chapter 7 bankruptcy filing against United Furniture Industries could begin to answer some key questions with the case moving forward.
Perhaps the biggest among these is the worth of the company’s assets and who ultimately gets paid what from the liquidation of those assets.
At this stage, there are three creditors that have petitioned for the involuntary bankruptcy: Wells Fargo Bank, Security Associates of Mississippi/Alabama and V&B International.
Security Associates is owed no less than $265,000 and V&B is owed no less than $30,486, according to the petition filed Dec. 30 in the U.S. Bankruptcy Court for the Northern District of Mississippi.
Wells Fargo is believed to be among the largest, if not the largest secured creditor, as it is owed more than $99.2 million — excluding interest, fees and other expenses.
By forcing the company into bankruptcy, the petitioners are hoping to claim some of what they are owed.
But the amount of these claims could just be a portion of what’s due other creditors, ranging from fabric and frame suppliers to furniture carriers who allegedly haven’t been paid in months, according to various sources.
One traffic coordinator who worked for United told Home News Now that three outside carriers she worked with that hauled product for United are owed $150,000. The same source said another single freight broker she knows of is owed as much as $850,000.
These are just two examples of domestic companies that are hurting financially because United’s ownership has been unwilling to pay its bills.
“These people have not been paid in months,” the source noted. “They don’t have a voice. … Some of these people still have loads of furniture on their trailers and they will do nothing about it.”
And that’s not the worst of it. Sources have told Home News Now that Asian factories that built case goods and other wood products mostly for sister company Lane Home Furnishings are owed upwards of $85 million.
Since United closed its doors abruptly on Nov. 21, these and many other suppliers have been waiting for word on what’s next, including when they might get paid even some of what they’re owed.
Here’s a snapshot of what is expected to take place moving forward.
Once a trustee is appointed to the case, the details of who is owed what will become more transparent, according to a source with Wells Fargo.
In addition to coming up with an inventory and valuation of all the debtor’s property, the trustee also arranges to sell the debtor’s property and instructs creditors where to file their claims.
“As soon as the trustee is appointed, everything will be more clear-cut — in that this is what you need to do,” a source with Wells Fargo noted, adding that more and more creditors are expected to emerge. “That is when our lawyer said we will see even more people come out of the woodwork.”
But the process could drag out for weeks if not months, particularly if there are objections from United’s ownership, which reportedly has 21 days to respond to — or contest — the involuntary Chapter 7 petition.
For the record, Wells Fargo has asked the court to shorten this to 10 days from the date of its Dec. 30 motion and also has requested that a trial date for the case be established within the next 20 days from Dec. 30 “in order to prevent further deterioration of the assets of the alleged debtor’s estate.”
Even if all this goes according to the bank’s and other petitioners’ wishes, the trustee can also challenge certain claims, although this would likely involve some bad publicity because of how poorly United has managed its affairs thus far — from the ownership’s middle-of-the-night text telling workers they were fired to its total lack of transparency regarding the closing. United’s ownership and legal counsel have not responded to Home News Now’s multiple requests for comment regarding the closing and its aftermath, including the involuntary Chapter 7 petition.
Other sources note that the trustee also will oversee the sale of various company assets and then distribute those assets to the creditors, a process that could take months.
It’s too early to say what creditors will see in return for their hard-earned money as vendors, suppliers and service providers to a once-hugely respected force in the furniture industry.
Here too the prognosis could be grim. The bank, again appearing — by far — to be the largest of the creditors, offered this assessment in a declaration from Marc Grossman, managing director: “Wells Fargo is owed at least $99,208,769.05. Wells Fargo estimates that any recoveries from liquidation of its collateral will result in a recovery equal to a fraction of this amount.”
The hope is that all the other creditors who are starting to emerge come out of this at least that well.
What about the workers. Let me guess, screwed 🥺