Another high-end furniture company announced that they are filing for bankruptcy protection in Florida due to the state of the economy. Previously, our Miami bankruptcy law blog discussed the Chapter 11 filing by Robb & Stucky. The furniture chain, which had been in business for 96 years, chose to file bankruptcy after coming to the conclusion that the recession had caused a significant decrease in sales and the company could no longer mange its debt. In the filing, a judge ordered that the company liquidate its assets.
This month Carls Furniture announced that the downturn in the economy and the housing crash in South Florida have also affected the company’s sales, but the business hopes that the decision to file bankruptcy will allow the company to move forward with a fresh start.
Carls Furniture reported that the company’s sales saw a 30 percent decrease in a 12-month period between 2009 and 2010. The furniture chain has been a family-run business since 1974 and has been focusing on ways to keep the business afloat during the recession.
The company first recognized that they were facing financially difficult times after sales significantly dropped between 2005 and 2007. The operations of Carls Furniture also suffered after the company’s president died in 2005. In efforts to prevent filing bankruptcy, the company chose to close several stores in Florida and sold some of its real estate.
In 2008, the company sold off part of its Carls Patio business. “We wanted to shore up our balance sheet and pay off our debt in full to make sure we were on solid ground should the downturn continue,” said the president of the company in a 2008 statement. And the downturn did continue.
After years of downsizing and finding ways to generate income, the company decided that filing Chapter 11 is now the company’s best solution to controlling its debt. Carls Furniture does believe that the company will benefit from the bankruptcy and will be able to better serve its clients as a result.
Before the recession, many individuals and businesses never imagined that they would be filing bankruptcy down the road. However, during financially difficult times, people suffer and businesses suffer. Under these circumstances, an individual or small Florida business may be able to regain control of their financial situation through bankruptcy protection.
Source
Miami Herald: “Carls Furniture declares Chapter 11 bankruptcy, will close Kendall store,” Douglas Hanks, 25 May 2011