DETROIT — Roughly six months after opening its first store, Loves Furniture and Mattresses has filed for Chapter 11 bankruptcy reorganization, leaving consumers and employees to figure out what’s next and how to get their money back.
Citing “significant and unforeseen warehouse and delivery issues, unplanned expenses, supply chain issues and delayed store openings,” the company filed for protection Jan. 6. On the same day, truck rental and delivery service Penske filed suit against the three-state retailer for its past-due balance, filing a motion for a temporary restraining order and emergency hearing to prevent Loves from moving or delivering items in its warehouse.
The announcement has left much of the furniture industry talking shop about how this happened and who might swoop in to take on Loves’ leases and business.
“On Dec. 5, 2020, we went to the Portage store and found the couch that I wanted and paid in full for it, $3,018.88. We were told at that time it would be delivered around Jan. 6,” wrote one customer in the comments of a Detroit WDIV Local 4 article about the bankruptcy. After hearing about the bankruptcy, “we emailed CustomerCare@lovesfurniture.com, (and) this is the reply we received: ‘Unfortunately, we are unable to process any deliveries or pick ups at this time. We must wait for the bankruptcy court to approve our arrangements. Please check back in a few days.’ So now we are out our $3,018.88 and no couch!”
In a Detroit-specific Reddit thread, another Loves customer said she guessed her extended warranty was “totally wasted money.”
In the retailer’s release about the bankruptcy filing, Loves Furniture CEO Mack Peters indicated that Loves is working with “critical stakeholders to protect customers who placed deposits,” but that “those arrangements must be approved by the Bankruptcy Court and are subject to modification. … Loves does not want to create any confusion amongst customers by making representations about processes that are not final.”
Additionally, Peters and Loves encouraged customers who have purchased floor sample merchandise for customer pick-ups to contact the store at which the goods were purchased to make arrangements for pick-up and await contact from Loves’ liquidation agents to fulfill all other customer orders.
But consumers are being advised by local news outlets, consumer advocacy groups and the Better Business Bureau to work with their banks to protect their money and prepare for the worst.
Detroit’s WDIV Local 4’s “Help Me Hank” consumer investigative reporting team noted that the BBB said the situation is “problematic for those who received their furniture but may have a warranty,” as the BBB advises that shoppers should not expect the warranty “to mean much.”
The situation is frustrating for customers, which could make the possibility of reopening some stores after liquidation that much more difficult, especially after bad customer reviews and order cancellations following delivery difficulties and delays were credited as part of the reason Loves is filing for bankruptcy.
“As customer merchandise could not be located, frustrated customers canceled orders,” Peters noted in bankruptcy declaration filing. “This also resulted in negative comments related to Loves’ ability to deliver merchandise on social media, which also resulted in diminished traffic to the stores.”
Restructuring and reopening stores is a possibility offered in the bankruptcy filing, with the company stating that liquidation of its 25 locations is needed both to “determine if sufficient funds can be raised to effect a restructuring of up to 12 stores after the sales” and to maximize the value of its inventory.
“While it may seem contradictory that the Debtor seeks to conduct liquidation sales events to reorganize a core of its business operations, it is not,” the company wrote. “In fact, the only route to a reopening of any store locations is the accumulation of sufficient proceeds from the sales to fund a reopening. Without a means of converting inventory to cash, the Debtor has no reasonable likelihood of maintain operations or reorganizing.”
For many Loves employees, the situation is all too familiar, with many (both on the corporate level and in-stores) having been brought over from Art Van after its early-2020 collapse.
“I honestly can’t believe we’re doing this again,” wrote one employee in a Michigan-specific Reddit forum. “Really thought my job was saved, but we’re here again.”
On Dec. 3, 2020, in an effort to reduce costs, an agreement was entered into with Planned Furniture Promotions, which also liquidated the Art Van inventory purchased by Loves earlier in the year, to liquidate the inventory at 13 Loves locations, leaving 12 of the retailer’s highest performing stores running.
At those 12 remaining stores, staffing was reduced to “only those individuals needed to support a 12-store footprint,” according to paperwork, effective on Dec. 21, 2020. Further reductions took place on Jan. 7.
For now, remaining in-store employees can anticipate having jobs through the liquidation sales of the stores, according to an email from Peters, who said they would be offered the opportunity to stay on for the sale. Loves has engaged a joint venture team of PFP along with Hilco Merchant Services to conduct the bankruptcy liquidation, pending court approval. Furniture Today contacted PFP, which could not comment at this time.
After that, most employees say they are in limbo.
“There’s been some talk of getting to stay on if they can reopen our store after everything or if the stores get bought by another furniture store, but I know I won’t be here,” wrote another Reddit commenter. “I’m not taking a third chance.”
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January 19, 2021 at 06:58PM
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Not feeling the Loves: Customers, community reacts to retailer's fall - Furniture Today
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