Coronavirus Crashes Reorganization Hopes for Store Fixture Maker

Bankrupt Fleetwood Acquisition Corp., a manufacturer of fixtures for retail stores, is giving up hope of reorganizing in the wake of coronavirus shutdowns and instead plans to sell its remaining assets to a liquidator.

Fleetwood’s motion filed Tuesday in the U.S. Bankruptcy Court for the District of Delaware seeks permission to sell inventory, furniture, and equipment at its remaining Colorado location to Industrial Recovery Services for $465,000, plus 70% of proceeds greater than $540,000 that Industrial may recover in auctioning the assets.

"[T]he Debtors no longer believe it is feasible to operate as a going concern or seek confirmation of a plan of reorganization,” Fleetwood said. Instead, it intends to liquidate remaining assets, cease operations, and wind down the Chapter 11 as soon as practicable.

The company is the latest to shift to liquidation as efforts to stem the spread of Covid-19 put a wrench in Chapter 11 reorganization plans. Michigan-based retailer Art Van Furniture LLC, for example, recently converted to a Chapter 7 liquidation after the pandemic made its going-out-of-business sales impossible.

Fleetwood filed Chapter 11 in November 2019, already suffering from a downturn of revenue in a retail industry slump. At the time, Fleetwood’s goal was to right-size and streamline its operations, it said.

The company sold its assets located in Pennsylvania in December and January, it said.

But a major customer recently told Fleetwood that it no longer would place any orders in 2020, the company said. Several others followed suit.

“The collective loss of these customers has had a devastating impact on the Debtors’ cash flow and its go-forward business plan,” Fleetwood said.

The company wants to sell the Colorado assets in a private sale, without an auction.

Judge Karen B. Owens will consider the motion at a hearing May 7.

The case is In re Fleetwood Acquisition Corp., Bankr. D. Del., No. 19-12330, Sale Motion filed 4/14/20.

For additional legal resources, visit Bloomberg Law In Focus: Coronavirus.