Bankrupt LL Flooring Avoids Retail Graveyard
LL Flooring will remain in business after all, following its acquisition by F9 Investments.
F9 is led by Tom Sullivan, who founded the company in 1994 under the Lumber Liquidators banner. The company name was rebranded in April 2020 to LL Flooring.
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The acquisition would allow LL Flooring to continue as a going concern and save some jobs, although it will have a smaller footprint. At the time of the Chapter 11 filing last month, the retailer had operated about 400 locations, and was in the process of closing stores. The F9 deal would see 219 continue in operation. Also part of the transaction is the company’s Sandston, Vir., distribution center and other assets, including intellectual property. Court documents indicate that bidding procedures are in place for the assets. That means that the federal bankruptcy court judge overseeing the case won’t give the final nod until after a court auction in case there’s a better offer.
Prior to the bankruptcy, the company was exploring strategic options with potential buyers, but had said nothing materialized into a sale. It then went on to file its Chapter 11 petition, and pivoted to a liquidation of the operation. The company also had been embroiled in a proxy fight with Sullivan, who had submitted a non-binding offer to acquire his former business. Sullivan’s plan was to merge the business with Cabinets to Go, a separate operation he also founded that is a division of F9 Brands. F9 also filed an objection in the bankruptcy case to the retailer’s liquidation plan, citing lack of transparency in the sale process. F9 subsequently submitted a revised bid for the retailer.
It was learned in court papers from Surbhi Gupta, a managing director at the flooring retailer’s investment banker, the flooring retailer received two proposals during the marketing process to find a stalking horse bidder. One was from F9, but the parties failed to reach an agreement on price and the retailer deemed it would get a higher value in a liquidation. A second proposal was received from Isaac Capital Group, but it couldn’t obtain the required financing to close on a deal. Hence, the initial pivot to a liquidation.
The F9 transaction could close over the next few weeks. Details on the purchase price weren’t yet available at press time.
It also wasn’t immediately clear how many jobs of the nearly 2,000 employees at time of the Chapter 11 filing would be saved, nor which name the business would operate under—LL Flooring or its better-known banner Lumber Liquidators—after completion of the sale.