An Ontario court has granted Bad Boy Furniture Warehouse Ltd. permission to begin liquidating its stores as it works to restructure the business.
A court order given by Judge Herman Wilton-Siegel on Nov. 17 allowed the Pickering, Ont.-based furniture company known for its zany television and radio ads boasting “nooobody” could beat its prices to immediately start selling off its merchandise.
Documents filed with the Superior Court of Justice say sales will occur at the brand’s 12 stores located in southern Ontario for the first 30 days of its liquidation period.
After that period, the documents say some stores will close and consolidate while others will remain open. Under the court order, the liquidation sales must end across the company’s entire network by Feb. 15.
The permission to liquidate comes as the company, which was started by former Toronto mayor Mel Lastman in the 1950’s and revived by his son Blayne Lastman in the early 1990’s, has admitted it is operating in a “challenging” economic environment.
High interest rates, declining sales in the housing sector and a tight retail climate have hampered the company so much that it is aiming to restructure through a notice of intention filing it made under the Bankruptcy and Insolvency Act on Nov. 10.
Notice of intention filings allow companies facing financial difficulties to restructure their operations in a more fiscally prudent way. They typically start with businesses presenting a proposal to the court that helps it avoid bankruptcy while offering creditors some compensation for the amounts owed by the company.
A court originally gave Bad Boy until Dec. 9 to make a proposal, but on Friday, Wilton-Siegel granted Bad Boy an extension. It now has until Jan. 23 to make a proposal.
KSV Restructuring Inc., a company Bad Boy hired to help with its reorganization, has warned Bad Boy will likely file for further extensions because its liquidation sales could wrap after the proposal is due.
Documents granting the extension show that since Bad Boy’s original filings were made, 20 of its 275 employees have lost their jobs. Those cut were mostly employed at the company’s head office and warehouse.
“There will be substantial further employee terminations in connection with the closure of stores, including terminations during and following the 30-day initial sale period,” court filings say.
“Remaining employees are currently assisting with the wind-down of the company’s business operations and will ultimately be terminated if there is not a going concern restructuring outcome for the business.”
Bad Boy’s debts owed to unsecured creditors total $13.7 million and 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.
It also has collected $4.5 million in deposits from customers for furniture that has yet to be delivered. Customers have been encouraged to contact their credit card providers for refunds.