Melbourne, Fla. - Appliance Direct, the Central Florida majap chain known for CEO Sam Pak's aggressive, price-driven TV commercials, has filed for Chapter 11 bankruptcy protection.
The voluntary filing, made April 21 with the U.S. Bankruptcy Court's Orlando division in the Middle District of Florida, cited the "historic, unprecedented decline in the economy, and the decreased consumer spending on home appliances ... [which] had a significant impact on operations."
The closely-held company, founded in 2002, also attributed its inability to pay creditors and service its debt to "an unsuccessful expansion effort" in which it assumed the leases to 16 former Rex stores in Alabama, Florida, Georgia and Mississippi in 2009.
At its height in 2006, the chain ranked 20
on TWICE's Top 100 Appliance Retailers rankings - ahead of Nebraska Furniture Mart, Sears' The Great Indoors, Fry's and Kmart - with $102 million in sales and 21 stores.
The company is now down to eight locations, which generated between $35 million and $38 million in net sales last year, according to court documents.
Its largest creditors are Whirlpool, which is owed $5.5 million; GE, owed $2.8 million; and LG, owed $2 million. The company put its net worth at about $6 million.
Appliance Direct attorney Scott Shuker said the company has worked out a $5.3 million payment agreement with Whirlpool which will allow it to emerge from bankruptcy, according to a report in Florida Today.
Appliance Direct has 47 employees that are "leased" through a third-party firm. All report to Pak, who owns 75 percent of the business, and his president and treasurer Mark Salmon, who owns 25 percent.
Pak appears in the company's TV commercials, including a signature spot in which he bangs on appliances and repeatedly proclaims that if you didn't buy Direct, "You paid too much!"
The bankruptcy was triggered by three lawsuits by delivery truck drivers accusing the chain of violating the Fair Labor Standards Act, which resulted in the Chapter 7 bankruptcy of an affiliate business entity.