Carlstadt, N.J. – CE, IT and
housewares distributor Archbrook Laguna has filed for Chapter 11 bankruptcy
protection and seeks to auction off its inventory next month.
The company,
said it was searching for new financing or a buyer, was forced
into bankruptcy after lenders GE Capital, Bank of America and PNC Bank cut its
credit following a loan default, and vendors including Samsung stopped shipping
it.
The distributor, which was operated by chairman Darren Marino and executive VP Joel Blank, had assets of $246 million and liabilities of $176.4 million as of March 31, including $36.9 million owed to the banks.
Top 10 creditors and the amount of
their claims include: Dell, $9.8 million; Garmin, $5.7 million; Toshiba America
Information Systems, $5.3 million; Samsung Electronics America, $4.9 million;
Hewlett-Packard, $4.9 million; TomTom, $3.7 million; Acer, $3 million; Toshiba
Consumer Products, $2 million; LG Electronics, $1.8 million; Lenovo, $993,000;
and Sharp Electronics, $985,000.
According to bankruptcy court
documents, Archbrook’s retail accounts include Amazon.com, Best Buy, Costco,
Newegg.com, QVC and Walmart. Broken out by distribution channel, national
retailers and Expert Warehouse — the buying and fulfillment arm of the
BrandSource buying group in which Archbrook held a 60 percent stake — each
represented 18 percent of total sales, followed by online-only e-tailers (16
percent), rent-to-own (14 percent), other (14 percent), and independent dealers
(12 percent).
Gross revenues were $808 million
last year, of which $49 million was derived from its investment in Expert
Warehouse.
The privately held business was
formed in 2000 from the merger of New Jersey-based Laguna Corp., Georgia-based
BDI Distributors and ArchBrook, a Delaware corporation. It has 267 employees
and maintains distribution centers here and in Atlanta and Reno, Nev.
Archbrook partnered with BrandSource
in 2005 to form Expert Warehouse, which initially carried CE and added major
appliances in 2010. Samsung was its largest electronics vendor, historically
accounting for about 40 percent of CE sales, while Whirlpool represented for
about half of all white-goods sales, court filings show.
BrandSource acquired Expert’s
inventory for about $4.8 million, and assumed its debt obligations, on July 5,
and has since moved its business to global distributor Ingram Micro. Home
Entertainment Source, the buying group’s specialty A/V division, is also listed
as a creditor with a claim of $171,000.
Archbrook attributed its liquidly
squeeze to aging inventory and a shortfall in promised vendor marketing support
that triggered covenant violations with its lenders. The problems were
compounded by accounting issues associated with a difficult transition to a new
software platform.
In the wake of Archbrook’s loan
defaults, Samsung, which sold more than $100 million worth of goods through the
distributor last year, demanded a $7.5 million letter of credit to continue
doing business with the company, which the banks would not approve.
Archbrook said it has been exploring
strategic alternatives including refinancing and a possible sale of the company
since May 26.
A hearing will be held July 19 in
the U.S. Bankruptcy Court of the Southern District of New York in Manhattan to
approve the auction, which is tentatively scheduled for Aug. 8.
