During a hearing in Mississippi bankruptcy court Friday, lawyers for Wells Fargo revealed they received a motion from United Furniture Industries, less than a half-hour before the session, to file for Chapter 11 bankruptcy.
Frank Childers, attorney representing Wells Fargo, said the bank and other creditors seeking repayment from the defunct Mississippi-based furniture manufacturer needed more time to review UFI’s motion and requested a postponement of the hearing.
“Based upon the short timing of filing, we would like more time to consult,” he said during the telephone hearing.
Judge Selene D. Maddox, who presided over the hearing held in the United States Bankruptcy Court Northern District of Mississippi, said the court agreed all parties needed additional time to review UFI’s motions and rescheduled the hearing for Jan. 13.
Wells Fargo filed a motion on Jan. 3 calling for the expedited hearing of the emergency motion for appointment of an interim trustee to liquidate UFI’s assets to pay off the company’s creditors.
Following Wells Fargo’s emergency motion filed on Dec. 30 seeking involuntary Chapter 7 bankruptcy for UFI, another creditor, Renasant Bank, filed a similar motion seeking repayment of $12 million in loans. Wells Fargo said the furniture manufacturer owes the bank $99.2 million in secured debt.
Security Associates of Mississippi/Alabama and V&B International Inc. were also named as plaintiffs in the motion, with the former declaring it has no less than $265,000 in unpaid services and the latter saying it’s owed at least $30,486.50 in purchase orders. But a Dec. 31 filing stated that the petitioners hold unsecured claims against UFI of $97.8 million at minimum.
With a Chapter 11 filing, UFI would attempt to restructure under the supervision of a court-appointed trustee with the goal of emerging as a viable business. The Chapter 7 filing would require the company to liquidate its remaining assets to repay creditors with secured debts taking precedence. A report in the New York Post claimed that David Belford, owner of Stage Capital, LLC, which counts UFI among its subsidiaries, shut down the company after an emergency board meeting on Nov. 20 that resulted in the decision to file Chapter 11 bankruptcy protection. But Belford refused to follow that guidance.
UFI abruptly closed its doors on Nov. 21, sending an email to employees informing them of immediate termination with no continuing benefits, including COBRA. In the days following the closure, several class action and individual lawsuits were filed on behalf of employees terminated by the company. Those suits alleged the company violated the Worker Adjustment and Retraining Notification (WARN) Act by not giving workers 60 days notice of termination and requested the standard 60 days’ pay as outlined by the WARN Act.
In December, UFI was served with a civil suit by DFW LinQ Transport Inc., which alleged that more than 44,000 pounds of copper wire were supposed to be delivered to Southwire in Starkville, Miss., by UFI Transportation. The shipment brokered by DFW LinQ never reached its destination after the company’s shutdown.