Sofabed seller Jennifer Convertibles (JENN) filed for a pre-packaged Chapter 11 bankruptcy due to several back-to-back quarterly losses and an inability to find alternate financing.
The Woodbury, N.Y.-based company plans to continue to operate through the reorganization. A key component to the reorganization is a deal with its largest creditor and foreign supplier, Haining Mengnu, to continue supplying products and convert Mengnu's debt into equity in the company.
"We have negotiated several key agreements with our suppliers and, in order to achieve profitability, are exiting markets in which we previously operated in order to properly realign our business during the reorganization," said Chairman and Chief Executive Harley Greenfield. "I am confident that we will emerge as a stronger organization."
The bankruptcy calls for the company to close stores in a variety of unnamed markets, but it expects to be able to fulfill its existing and future customer orders. Jennifer Convertibles operates 142 namesake stores and 12 Jennifer Leather stores across the U.S. It also owns 154 Ashley Furniture HomeStores and licenses five others.
In its second-quarter earnings in April, the company's sales dropped about 3%, and 8.3% year-to-date. It reported a loss of $6.4 million.
The company's stock trades over-the-counter after being delisted by the New York Stock Exchange. Stock in the company will not have any value as a result of the reorganization plan.
On Monday, the stock plunged 80%, or 23 cents, to finish at 6 cents a share. It had been trading as high as $1.72 over the last 12 months.
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