Jennifer Convertibles, Inc., serving as owner and licensor of many furniture specialty retail stores throughout this country, has recently filed for bankruptcy protection under the guise of a deal converting its debt owed to both its supplier and creditor, Haining Mengnu Co. Ltd—into equity. In 2006, the company oversaw 175 Jennifer Convertibles stores and 16 Jennifer Leather stores—167 of which they owned.
Only six years ago, then New York State Attorney General Eliot Spitzer, introduced a consent order and judgment, which ultimately, reformed Jennifer Convertibles to practice better sales protocol while providing restitution to its consumers. Jennifer Convertibles, in accordance with the judgment, must never take part in any “deceptive, fraudulent or illegal business practices.”
As well, for not replacing or repairing any of its own defective furniture, this judgment from ‘04 forced the company to make restitution to its customers; and additionally, agreed to pay $275,000 in penalties as well as another $2,000 in costs.
According to Reuters, the recent deal “will be incorporated into a reorganization plan subject to approval of the bankruptcy court, the company said in a statement.” Of note, under this deal all shareholders will be eliminated.
“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,” said the company. Later, Jennifer admitted to its inability to find the resources to allow it to function while in bankruptcy. Jennifer Convertibles, in court papers recently filed, listed their assets at $30 million and their liabilities, $46.3 million.