(Bloomberg) — ABC Carpet & Home, the more than a century-old New York luxury home goods retailer, filed for bankruptcy late Wednesday with plans to sell itself after the pandemic and a delayed renovation upended its business.
ABC sought Chapter 11 protection in U.S. Bankruptcy Court in the Southern District of New York. It listed assets of up to $50 million and as much as $100 million of liabilities in its petition. The filing allows a company to continue operating while it works out a plan to repay creditors.
The Covid-19 pandemic cleared the city of many of ABC’s regular customers, while delays in restoring its store near Union Square made access more difficult for those who remained. And ABC, known for goods like $6,900 rugs and $1,480 coffee tables, didn’t develop a robust e-commerce business even as more spending shifted online.
ABC generated sales of about $25.5 million year-to-date through July 31, a roughly 50% drop compared to the same period in 2018, according to court papers.
By the time it filed for bankruptcy, ABC’s lack of cash became so dire that it risked a forced shutdown without near-term funding, lawyers for the company wrote in court papers. The retailer’s existing lender, 888 Capital Partners, has agreed to advance $5.7 million of fresh cash to ABC during the bankruptcy to fund operations.
The lender has also agreed to serve as the so-called stalking-horse bidder for ABC’s assets, setting a floor for further bids. If no better offers come in, the lender would forgive the bankruptcy loan and some $8.7 million of pre-bankruptcy debt in exchange for ownership of the business, court papers show.
ABC Carpet & Home has been working with advisers from B. Riley Financial Inc. and Greenberg Traurig to seek new financing or a buyer after a planned private-equity sale fell through, Bloomberg previously reported.
The company traces its roots to the late 1800s, when Austrian immigrant Samuel Weinrib started the business from a pushcart on Manhattan’s Lower East Side. His great-granddaughter Paulette Cole helped build its red-brick building on Broadway into a high-end destination for designers and decorators and their affluent clients.
The case is A.B.C. Carpet Co. Inc., 21-11591, U.S. Bankruptcy Court for the Southern District of New York.
(Adds information on sales and liquidity beginning in paragraph four.)
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