Furniture Brands International Inc., the maker of Broyhill, Lane and Thomasville home furnishings, won court approval to sell almost all its assets for $280 million that allows buyer KPS Capital Partners LP to keep the business intact.
U.S. Bankruptcy Judge Christopher Sontchi granted approval of the sale at a hearing yesterday in Wilmington, Delaware, overruling an objection from a shareholder that said a truncated sales process prevented Samson Holding Ltd. from making a competing bid.
The furniture maker this week canceled its bankruptcy auction after saying it received no other qualified bids to challenge KPS. The New York-based private-equity firm should close the sale by Nov. 25. KPS said it intends to operate the entire business and virtually all current employees will be offered jobs.
Furniture Brands entered bankruptcy with a deal to sell its assets to Oaktree Capital Management LP for about $166 million. KPS replaced Oaktree as the lead bidder after making a superior purchase offer. The private-equity firms each submitted improved proposals, with Oaktree stopping at $260 million, according to court papers.
Broadbill Investment Partners LLC, which owns about 4.7 percent of Furniture Brands stock, claimed that Samson, a Hong Kong-based furniture maker, was a “very real bidder” and would have offered more than KPS if the sale process wasn’t “cut in half,” its lawyer Tancred Schiavoni told the judge at the hearing.
“The evidence is clear that this process was a fair and open process,” Sontchi said. “Samson had numerous opportunities to participate.” He said he wasn’t going to jeopardize the sale on “a wing and a prayer.”
The sale was accelerated at the request of the unsecured creditors’ committee because they wanted to limit the deterioration in Furniture Brands’ cash position, which would have decreased their recovery.
“Nobody is more disappointed that the creditors’ committee” that there wasn’t another bidder, said Mark T. Power, a lawyer for unsecured creditors.
Furniture Brands was forced to seek bankruptcy protection after a depressed housing industry and weak consumer spending led to falling revenue, Chief Financial Officer Vance Johnston said in a court filing. Sales decreased 7.8 percent in the six months ended June 29 from the same period a year earlier.
The company, based in St. Louis, listed assets of $546.7 million and debt of $550.1 million in Chapter 11 documents filed Sept. 9.
The case is In re Furniture Brands International Inc., 13-bk-12329, U.S. Bankruptcy Court, District of Delaware (Wilmington).