Popular Canadian furniture store Bad Boy has filed a notice of intention (NOI) to make a proposal under the Bankruptcy and Insolvency Act to begin a restructuring process.
According to a notice filed by KSV Restructuring Inc., a licensed insolvency trustee named in the proceedings, the NOI was filed on Nov. 9.
“Bad Boy believed it was necessary in the context of a challenging economic environment driven by high interest rates, declining sales in the housing sector and a right retail climate, particularly in the home furnishing sector,” an advisory by KSV read.
The advisory said Bad Boy customers who recently placed deposits for future deliveries of furniture or appliances will not be getting refunds from the company.
“We regret to inform you that as a result of the commencement of the NOI proceedings, Bad Boy is unable to refund those deposits or to complete those purchases,” the advisory stated.
Those customers who purchased by credit card are being told to contact their credit card company to get a refund, KSV said. It did not mention anything for those customers who paid by debit or cash.
Bad Boy’s website is down with an error message that reads “service temporarily unavailable.”
One customer outside of a Bad Boy location in Scarborough told Global News he took advantage of a sale in late September where he purchased a set of appliances — fridge, stove, dishwasher, washer and dryer — with an expected delivery for December.
“Paid for it in full … over $6,000,” said Ivan Lu.
“It’s a lot of money that I am not really sure if I’m going to get it. Obviously, I feel a lot of frustration and just trying to figure out what’s the best course going forward. I can’t move into a house without appliances,” Lu said.
Another customer said he is in the same situation and had bought multiple appliances during the sale for around the same price.
“We were calling the store every week. We just thought it was kind of weird, they kept saying, ‘oh another week, another two weeks,'” said Ali Awan. “We paid for everything in full and there’s nothing we can do about it.”
Awan’s partner, Subo Awan, said they were never told about any financial issues within the company and that the appliances were taking long due to backorders.
“We believed that … and we don’t like being strung along.”
The furniture store was founded by late former Toronto mayor Mel Lastman in 1955 and was taken over by his son Blaine Lastman. There are around a dozen stores in Ontario.
However, Bad Boy still remains open for business during the process and it’s expected there will be a liquidation sale from certain stores, the KSV advisory said.
Bad Boy’s Superior Court of Justice filings say its parent company owes many of its vendors, including most of its appliance and furniture suppliers.
Its debts owed to unsecured creditors total $13.7 million, include $2.3 million to Whirlpool Canada LP, $840,924 to Samsung Appliances, $404,410 to LG Electronics Canada Inc. and $317,382 to RioCan Real Estate Investment Trust.
As a result, Bad Boy is facing “significant” challenges sourcing inventory and filings show some developers have purported to terminate their contracts with the company.
Retail analyst and consultant Bruce Winder told AM640 Toronto host Alex Pierson that the furniture business overall is down for several reasons.
One is that higher interest rates have made consumers put a pause on buying expensive ticket items such as furniture and consumers spent on furniture during COVID-19 with extra money from governments. Winder also said high duties have been added on to furniture coming into Canada making it a “really tough industry as of late.”
“If you look at the people who are buying furniture now, which are mostly Millennials, they probably wouldn’t put Bad Boy as a sort of a top choice for their furniture selection,” Winder said, noting the changes in the market, competition and target audience. “Millennials have other choices.”
— With files from The Canadian Press