by Some products are being held up at 3rd-party logistics warehouses, while others are being held at the company’s own distribution facilities
TAYLORSVILLE, N.C. — As part of an effort to reduce customer claims, the Mitchell Gold Co. is asking a bankruptcy court to allow customers to retrieve the products they paid for prior to the filing of its Chapter 11 bankruptcy.
The company said this process is critical to its post-petition sale efforts for two key reasons. First, it said, it will further maximize its estate by reducing customer claims against the estate at a value greater than what could be lost in a potential liquidation of those products, and secondly, by taking “actions that support the value of the brand in disposition.”
This language was part of a Sept. 12 filing with the U.S. Bankruptcy Court for the District of Delaware, where the company filed for Chapter 11 bankruptcy protection on Sept. 6. This followed its closing around Aug. 26, a move that impacted 533 workers in North Carolina, as well as hundreds of employees employed in its retail stores around the country.
The company estimates that about $6.5 million (retail value) worth of products is being held at third-party warehouses for customers who paid the retail price, plus shipping in advance. Because of the debtors’ pre-petition liquidity constraints, it said, the 3PLs have refused to arrange for delivery of those products.
“Retail customers are typically aware of the approximate delivery date of their retail products, and many have contacted the debtors and the 3PLs to learn that their retail products are ready to be delivered, but the 3PLs are unwilling to arrange delivery,” its Sept. 12 motion stated.
In addition, the company said that there is $17 million retail value of finished products being held at the company’s factory in Taylorsville, North Carolina, as well as its North Carolina distribution facilities. It also said that some customers placed orders through its made-to-order program and sent in COM (customer-owned material) for their order. As the company has not been able to manufacture those items leading up to and following the closing, it has asked for permission to return those materials to the customers.
“The debtors recognize that this merchandise is valuable to their customers and want to honor the orders placed by their customers,” the filing stated. “Honoring customer orders is not only consistent with the debtors’ long history of excellent customer service, but is critical to maximizing the value of the debtors’ estates.”
The motion asks the court to allow a process by which customers can either pay to have their materials returned and/or come pick up the materials and completed products themselves at the company’s facilities as part of a “merchandise retrieval process.”
This is potentially good news to Mary Snow, owner of Mary Snow Designs in Boston, Massachusetts. She has paid more than $7,800 for Mitchell Gold product for a client for an order placed around Oct. 21, 2022, that included several case pieces in the company’s Malibu collection.
The last she heard from the company the product was en route to be delivered to a local warehouse. Then she heard the shipment was being turned back to Mitchell Gold’s distribution facilities.
She said at this point the customer is fed up waiting for the product, so she isn’t quite sure if they have even purchased something else in place of the Mitchell Gold product.
“They were ready to pull the plug in early August and then the regional manager (from Mitchell Gold) said they had tangible information that it was in a container ready to be unpacked.’’ Snow said. “The client and I agreed let’s give them one more chance and then we will pull the plug.”
Snow said it would be great if the court agrees to allow paying customers like herself to retrieve the furniture.
“I would rather get my money back, but if I can get the furniture in two weeks …”
Other customers, however, have told Home News Now that they have already begun to dispute charges with their credit card companies as they haven’t received the product or hardly any communication from the company.
In another case, a customer has refused to pay because of what he described as problems with the pieces he received.
Steve Blumenthal, of Scottsdale, Arizona, said that he and his wife were furnishing a new condo they moved to in the area with a sofa, two large swivel chairs for the living room, a large round cocktail table and a dining table and some other items, including some bar stools and a console. He ordered the product March 14 and received much of it around Aug. 20.
Because he was continuing to receive digital 40% offers after placing his initial order for $27,000, he said he worked out a deal with the store that helped get the total price down to around $23,000. He also said that Mitchell Gold personally granted him a gift card to use for $250.
However, he said because items in the first group of pieces he received were not to his satisfaction, he is refusing to pay that $19,000 part of the tab until they repair the products.
“The bottom line is the quality is not good and now we know their quality control was suspect,” he said. “This is high-end stuff; you would not expect it to get out of there (like this).”
Thus far, he hasn’t been billed for the balance of the order, including some bar stools he ordered. He also hasn’t gotten delivery of a console that he was supposed to receive because of an additional store credit he was promised.
“I am disgusted with them as a company,” he said, noting that he also was not satisfied with the level of communication he was getting from the retail store or the company in general. “They have not been transparent from the get go.”
The way things have transpired, he said, he doesn’t expect to receive the bar stools or the console.
“If this is a dead deal, we will go out and buy the bar stools somewhere else,” he said, noting that calls he has made to the company go straight to the store in Scottsdale, where no one answers. “If they come out and fix my other stuff, I will pay my bill. I am 68 years old and have never seen anything like this happen before.”
Atlanta resident Barbara Conn said that she paid nearly $10,000 for a sofa and a cocktail table. About $5,500 was charged to her American Express card in May and the balance charged Aug. 22, just five days before the company announced it was closing.
When she learned of the bankruptcy and closing of its facilities, she contacted the credit card company immediately, disputing the charges.
At this point, the only communication she has gotten from the company was an email stating it was unable to continue its operations and that it regretted having to tell its customers this news.
She said that she went with Mitchell Gold because of its history in the industry and its perceived American-made quality. She also liked its sustainable practices and the positive things she has heard about the way the company treats its workers.
“It is just so shocking that this happened and that there has been such poor communication,” she said in reference to other customers that also likely have not received any word from the company. “I can’t even imagine how upset they are. It is just shocking and raises questions about the viability of the industry moving forward.”
Snow of Mary Snow Designs, also said that she was not pleased with the lack of communication from the company.
“I can’t believe there is not some sort of banner on the home page,” she said. “It is remarkable how there is no information about how to contact anybody. The way they have handled this is egregious in and of itself. It has not been well thought out to say the least.”
The company also has not returned repeated calls to Home News Now, which has offered officials an opportunity to explain the situation and how it plans to honor customer orders and an untold amount of customer deposits.
At least the company appears to acknowledge the negative fallout that the bankruptcy has caused with customers in its Sept. 12 motion with the court.
“The commencement of these Chapter 11 cases, and the circumstances surrounding them, has undoubtedly created apprehension on the part of customers,” the filing stated. “As previously discussed, the damage that would result if the debtors fail to honor their pre-petition Customer Practices significantly outweighs any arguable harm to the debtors’ estates if such obligations are honored.”
