* Files Chapter 11, assets to be sold
* Downturn in economy, furniture sales led to filing
NEW YORK May 19 Barcalounger Corp, which began
making reclining chairs in World War II, has filed for
bankruptcy protection and agreed to sell its assets, citing a
sales downturn that left it unable to survive.
In a filing in the Wilmington, Delaware, bankruptcy court,
Chief Restructuring Officer John Chapman said Barcalounger
cannot generate enough profit to continue as a going concern
because of "the dire turn in national furniture sales due, in
large part, to the global economic downturn."
According to the Chapter 11 filing, Barcalounger has
between $1 million and $10 million of assets, and between $10
million and $50 million of liabilities. One affiliate also
filed for protection from creditors.
Barcalounger said an affiliate of Los Angeles-based
investment firm Hancock Park Associates owns all its equity.
It said a Hancock affiliate, HPC3 Furniture Holdings, has
agreed to bid $1.5 million for the company's assets under a
"stalking horse agreement."
If the bankruptcy court approves the sale, Hancock will be
deemed to have waived a $32.44 million claim against the
debtors, Barcalounger said.
Barcalounger began making recliners in 1940, according to
its website, and has offices in Martinsville, Virginia.
The case is In re: Barcalounger Corp et al, U.S. Bankruptcy
Court, District of Delaware, No. 10-11637.
(Reporting by Jonathan Stempel; Editing by Gary Hill)