LL Flooring, formerly known as Lumber Liquidators, is set to close its stores and liquidate its businesses after failing to secure a buyer during bankruptcy proceedings. The company filed for Chapter 11 bankruptcy in August, hoping to find a buyer to continue running the enterprise. However, despite actively negotiating with multiple bidders, LL Flooring was unable to secure an offer that would maximize its value. As a result, the company will sell off its assets, run closing sales in stores, and wind down the business to deliver the most value to its creditors.
The closure process is expected to begin on September 6, 2024, and be completed in approximately 12 weeks. LL Flooring operates around 430 retail stores across 46 states in the United States. Prior to the bankruptcy filing, the company had already started winding down 94 underperforming stores, which were expected to be vacated by September.
The decision to file for bankruptcy was driven by multiple setbacks in recent years that negatively impacted the company’s liquidity. The pandemic-fueled housing market boom followed by a decline in the home improvement market caused a decrease in LL Flooring’s volume of transactions and average order size. These challenges ultimately led to the company’s liquidity crisis and the need to file for bankruptcy.
LL Flooring estimated its assets to be in the range of $500 million to $1 billion, with liabilities between $100 million and $500 million. The company has between 50,001 to 100,000 creditors, highlighting the significant impact of its closure on various stakeholders.
LL Flooring’s bankruptcy is part of a larger trend in the furniture sector, with several firms going bankrupt in the past year. Z Gallerie, a home decor retailer, initiated store closing sales as part of its Chapter 11 bankruptcy filing in October 2023. Similarly, Conn’s Inc., a furniture and appliance retail chain, filed for bankruptcy in July 2024 and began store closing sales.
According to a report from S&P Global, there have been 392 corporate bankruptcy filings across all sectors in the first seven months of this year, the highest since 2020. The rise in corporate bankruptcies can be attributed to various factors, including higher interest rates, geopolitical uncertainty, and economic cooling. The consumer discretionary sector, which includes firms selling nonessential goods, experienced the highest number of bankruptcy filings, followed by industrials, health care, consumer staples, information technology, financials, and communication services.
The American Bankruptcy Institute reported an 8 percent annual increase in overall commercial filings in August. Michael Hunter, vice president of bankruptcy data provider Epiq AACER, expects new filing volumes to continue increasing in the coming months due to rising delinquency rates, growing debt levels, high interest rates, and relatively flat household income.
In conclusion, LL Flooring’s decision to close its stores and liquidate its businesses comes after unsuccessful attempts to secure a buyer during bankruptcy proceedings. The bankruptcy filing reflects broader trends in the furniture sector, where multiple firms have faced financial difficulties in recent years. The rise in corporate bankruptcies across various sectors can be attributed to factors such as higher interest rates, geopolitical uncertainty, and economic cooling. As the commercial filing volumes continue to increase, it is clear that the impact of these closures extends beyond individual companies, affecting stakeholders and the overall economy.
