Attached files
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8-K - CURRENT REPORT - JENNIFER CONVERTIBLES INC | jenniferconvertibles_8k.htm |
EX-10.1 - PLAN SUPPORT AGREEMENT, DATED JULY 18, 2010 - JENNIFER CONVERTIBLES INC | exhibit10-1.htm |
Jennifer Convertibles, Inc., 417 Crossways Park Drive, Woodbury, NY 11797
516/496-1900
FOR IMMEDIATE RELEASE | ||
Contact: | Donald Radcliffe | |
Radcliffe & Associates | ||
212-605-0201 | ||
http://investors.jenniferfurniture.com |
Jennifer Convertibles Files Voluntary Petition for
Chapter 11 Reorganization; Reaches
Plan Support Agreement With Key Foreign Vendor For Continued Shipments, Sustained
Viability and Quick Turnaround
Plan Support Agreement With Key Foreign Vendor For Continued Shipments, Sustained
Viability and Quick Turnaround
Woodbury, New York
***July 19, 2010*** Jennifer Convertibles, Inc. (OTCBB: JENN) (the “Company”), a leading retailer in the field of
home furnishings, announced today that the Company and its subsidiaries have
filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the Southern District of New York. The
Company has reached an agreement with its largest creditor and key foreign
supplier Haining Mengnu Co. Ltd. Group (“Mengnu”), under which Mengnu will
continue to supply goods to the Company and will convert a large portion of its
pre-petition debt into common equity of the Company. The agreement is in the
form of a Plan Support Agreement which will be incorporated into a Plan of
Reorganization and thereafter subject to approval of the bankruptcy court and
any other regulatory approval (if any).
The decision to file for
Chapter 11 protection was based primarily on lack of liquidity which resulted
from the substantial losses the Company has incurred in recent periods. The
Company was unsuccessful in its efforts to obtain alternative financing that
would allow it to continue operating outside of bankruptcy, so the Board of
Directors determined that a Chapter 11 reorganization was in the best interests
of the Company, its customers, creditors, employees, and other interested
parties.
The Company intends to
continue its business operations throughout the administration of the bankruptcy
case and emerge as a going concern post-petition. The Chapter 11 filing is not
expected to negatively impact the fulfillment of existing or future customer
orders. Subject to any required approvals, the Company will use the proposed
financing plan from its supplier, along with cash generated from continuing
operations, to meet its working capital needs during the reorganization
process.
Harley Greenfield, CEO
and Chairman of the Board, stated, “Despite all of the issues we have faced over
the past several years, we continue to provide some of the industry’s best home
furnishings values. We have negotiated several key agreements with our suppliers
and, in order to achieve profitability, are exiting markets in which we
previously operated in order to properly realign our business during the
reorganization. Due to the quality of our products and our people, I am
confident that we will emerge as a stronger organization that will better
satisfy our customers, suppliers and employees. By agreeing with Mengnu in
advance of the filing, we will be in a great position to proceed with an
expeditious restructuring through bankruptcy which will provide us with a viable
capital structure as well as additional financing. This agreement also assures
that our obligations to our customers will continue to be met both now and in
the future."
The Company has filed or
will be filing a series of first-day motions in the bankruptcy court in the
Southern District of New York, seeking to ensure that there will be limited
disruption of its operations during the reorganization process. Although Chapter
11 law prohibits payments for any invoices that were outstanding at the time of
the filing without prior court approval, it does provide greater protection to
those suppliers who prospectively agree to continue working with the Company.
Approval of the bankruptcy reorganization, and all principal steps related
thereto, will be subject to numerous conditions, including, but not limited to,
a definitive written plan of reorganization approved by the federal bankruptcy
court located in New York City. The expected plan of reorganization does not
contemplate that there will be any continuing value for the present stockholders
of the Company.
The Company’s general
bankruptcy counsel is Olshan Grundman Frome Rosenzweig & Wolosky LLP and its
financial advisor is TM Capital Corp.
Statements in this press
release other than the statements of historical fact are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Such statements are subject
to certain risks and uncertainties, including changes in retail demand, vendor
performance and other risk factors identified from time to time in the Company's
filings with the Securities and Exchange Commission that could cause actual
results to differ materially from any forward-looking statements. These
forward-looking statements represent the Company's judgment as of the date of
the release. The Company disclaims, however, any interest or obligations to
update these forward-looking statements.