New York — Harvey Electronics will continue to receive funds for the next eight weeks through a $1.5 million debtor-in-possession line of credit from its secured lender YA Global Investments, the retailer disclosed today.
Harvey said it has received a renewal of its interim financing order from the U.S. Bankruptcy Court for the Southern District of New York. The credit line was established at the time of the chain’s Chapter 11 bankruptcy filing in December.
Harvey will proceed with liquidation sales at its five freestanding stores, which were approved by the court last week, and said it may open additional in-store shops within the New York metro area as it shifts to a custom install-only strategy.
“This court order allows us to move towards the conclusion of our restructuring efforts,” said Michael Recca, Harvey’s interim CEO and chief restructuring officer. Recca said the company would continue to operate its two Manhattan shops, located within ABC Carpet & Home, a home furnishings emporium, and in a nearby Bang & Olufsen showroom in the borough’s Flatiron district.
“These stores are very important to redefining our business model, maintaining consumer awareness and completing existing customer orders,” Recca said. “As we continue to restructure our operations to exclusively focus on the custom integration of in-home technologies, Harvey is exploring additional store-within-a-store locations in the New York metro area.”
Harvey will close its freestanding stores in Paramus and Bridgewater, N.J.; Greenvale and Mount Kisco, N.Y.; and Greenwich, Conn., over the next several weeks, Recca said, comprising substantially all of the company’s assets, court documents show. The bankruptcy court also approved the sale of Harvey’s name and other intellectual properties.
The going-out-of-business sales, which were sanctioned to run through May 31, will be conducted by Clear Bid and Hudson Capital Partners. Proceeds will go to YA Global; to a trust for unsecured creditors including Bang & Olufsen America, Monster Cable and D&M Holdings; and will be used to pay the liquidators and various legal and administrative fees.
According to court documents, Harvey, which was acquired in 2006 in a cash-for-equity deal led by Trinity Investment Partners, lost nearly $744,000 last month on sales of $1.6 million.
One of the last remaining A/V independents in the New York metro market, Harvey saw its fortunes sour in recent years as national big-box chains began saturating its trading area. Last year’s failed attempt to acquire MyerEmco, a last-ditch effort that would have extended Harvey’s footprint to Maryland, cost the company more than $1.2 million and the distraction of management. The cash hit, plus its inability to raise new equity capital, triggered the delisting of its common stock from Nasdaq, which led to loan defaults and its eventual Chapter 11 filing, the company said.