Rhodes Inc., Files Voluntary Chapter 11 Bankruptcy Petition

Furniture World Magazine

Rhodes, Inc., the major home furnishings retailers operating89 stores in 13 southern and midwestern states has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. The Company filed the petition in U.S. Bankruptcy Court for the Northern District of Georgia in Atlanta, Georgia. Rhodes emphasized that normal operations and customer service will continue without disruption, including sales, order processing, and delivery. In connection with its Chapter 11 filing, the Company also announced that it has secured an $88 million debtor-in-possession (DIP) financing facility from Wells Fargo Retail Finance. The Company anticipates that the DIP financing, together with its ongoing revenue stream, will be sufficient to fund its operations, including payment of employee wages and benefits, during the reorganization process. "After careful consideration we concluded that a Chapter 11 restructuring represents the best long-term solution for Rhodes Furniture," said Steven S. Fishman, President, CEO, and Chief Restructuring Officer. "It is our goal to reach an agreement with our creditors in a quick and efficient manner, allowing us to restructure our debt and close underperforming stores with minimal disruption to our operations." Rhodes has identified 26 store locations and five related support operations that will be closed as a part of its restructuring. A list of those stores is attached to this release. The Company expects to reorganize its business around the remaining 63 stores. This restructuring allows the Company the opportunity to address the financial issues presented by the operation of unprofitable stores. The restructuring will allow the company to reduce its debt levels, improve its balance sheet, and align its business strategy and operational structure with the current climate and market conditions. "We appreciate the ongoing loyalty and support of our employees and vendors. Their dedication and hard work is critical to our success. We remain committed to leading Rhodes Furniture toward a strong and profitable future with the help of our employees, our customer base, and our vendor community. Rhodes Furniture remains a viable business that is deeply committed to our employees and the major markets in which we operate," Fishman commented. The Company has not set a target date for emergence from Chapter 11, but Fishman stressed that the Company's strategy is to move quickly. "There is much work ahead," he stated, "but time and time again, our employees have proven their ability to face significant challenges and handle change. By working together, we can succeed to preserve Rhodes Furniture and its future." Rhodes, Inc., headquartered in Atlanta, Georgia, is one of the largest furniture retailers in the country, offering brand-name residential furniture to middle- and upper-middle-income customers. Stores and Operations to Be Closed by Rhodes, Inc. Atlanta, Ga. (Doraville Outlet) Atlanta, Ga. (Perimeter) Birmingham, Ala. (Brook Highland) Birmingham, Ala. (Five Points West) Charlotte, N.C. (Matthews) Chicago, Ill. (Orland Park) Chicago, Ill. (Schaumburg) (Outlet only) Chicago, Ill. (Sleepy Hollow) Cincinnati, Ohio (Eastgate Road) Cincinnati, Ohio (Princeton Pike) Columbus, Ohio (Hamilton Outlet) Columbus, Ohio (Hamilton Road) Columbus, Ohio (Morse Road) Columbus, Ohio (Sawmill) Columbus, Ohio Distribution Center Dayton, Ohio (Beaver Creek) Dayton, Ohio (Miamisburg) Florence, Ky. Greensboro, N.C. Greensboro, N.C. Outlet Greenville, S.C. Jacksonville, Fla. (Northside Outlet) Jacksonville, Fla. Home Delivery Kansas City, Mo. (Independence) Kansas City, Mo. (Olathe) Kansas City, Mo. Home Delivery Nashville, Tenn. (Cool Springs) Nashville, Tenn. (Rivergate) Nashville, Tenn. (White Bridge) Nashville, Tenn. Home Delivery Spartanburg, S.C. Winston-Salem, N.C.