Buxbaum Group To Liquidate Krause's Inventory And Equipment In Manufacturing Plant

Furniture World Magazine

Buxbaum Group announced that it has been retained to liquidate inventories from the remaining group of 57 Krause’s Custom Crafted Furniture and Castro Convertibles retail locations operated by Krause’s Furniture, Inc. (AMEX-KFI) of Brea, Ca. The firm was also retained to liquidate all machinery and equipment in Krause’s 250,000-square-foot factory in Brea. Going-out-of-business sales began at 43 of the stores, which include seven Castro locations in New York and New Jersey, and 36 Krause’s in California, Washington, Arizona and Colorado. The sales will included inventories from the 14 additional locations in this group that were recently closed. Those recently closed stores included 11 Krause’s locations in Arizona, California, Colorado and Nevada, and three Castro showrooms in New York and Connecticut. According to Krause’s, the inventories being liquidated in this final sale are valued at $7.5 million at cost, which equates to approximately $22.5 million at retail. All merchandise will be sold at a minimum discount of 40%-off original prices, payable in cash or by credit card. No checks will be accepted, and Krause’s consumer financing programs will not be available. In addition to sleeper sofas, love seats, sectionals, chairs and other upholstered furniture manufactured in the company’s plant, the Krause’s and Castro stores carry such related home furnishings as occasional tables, accent chairs, area rugs and accessories. This final round of store closings follows a previous sale launched by Buxbaum Group in mid-August at 22 Krause’s and three Castro locations. Krause’s, a vertically integrated manufacturer and retailer of made-to-order upholstered furniture and accessories, filed for protection under Chapter 11 of the Federal Bankruptcy Code on July 20 in the U.S. Bankruptcy Court in Santa Ana, Ca. In its court petition, Krause’s cited the current economic environment as the primary cause of its Chapter 11 filing. Earlier this year, the company had closed 11 under-performing showrooms in various markets. At the time of the bankruptcy filing, the company received debtor-in-possession financing designed to support operation of the 55 remaining showrooms through September 30, 2001. In the event that a sale of the company’s assets was not completed by that date, the company would be compelled to liquidate inventories and then cease operations. "The estate, secured lenders and creditors committee were unable to come to terms with buyout groups that had put forward proposals for the acquisition of the assets by the September 30th deadline," said David Ellis, Chief Operating Officer of Buxbaum Group, Encino, Ca. "Accordingly, the company had no choice but to liquidate. "For consumers, this sale represents an outstanding opportunity to purchase Castro and Krause’s renowned sleeper sofas and other furniture at unusually low prices," Ellis continued. "Given today’s difficult economic environment, we are beginning the sale with 40% discounts, well above the 25% opening discount typically used in furniture store closings sales." Castro’s roots go back to 1931, when Bernard Castro invented a concept in convertible furniture that revolutionized the industry. His goal was to be, "First with the most advanced engineering and manufacturing methods, and first in the minds of the American people for superior value in finely crafted, convertible designs." The New York-based company ultimately expanded its line to offer Queen, full and twin-size convertibles in full-size sofas, petite sofas, love seats, chairs or sectionals. Castro was subsequently acquired by Krause’s, which had opened its first retail showroom/manufacturing facility in Southern California in 1973. Like Castro, over the years Krause’s moved beyond sofas, with its plant manufacturing chairs, love seats, recliners and other upholstered furniture, including the Castro line. Prior to this liquidation, the company employed approximately 800 people at the stores, Brea plant and distribution centers in Livermore, Ca.; Kent, Wash.; Denver, Colo.; Houston and Arlington, Tex.; and New Hyde Park, N.Y. Buxbaum Group provides inventory appraisals, turnaround and crisis management and other consulting services for banks and other financial institutions with retail, wholesale/ distribution and consumer-product manufacturing clients. The firm also provides liquidation services on consumer-product inventories, machinery and equipment, and buys and sells consumer-product inventories.