Bankrupt Mitchell Gold + Bob Williams to Liquidate
Bankrupt Mitchell Gold will liquidate after a Delaware court gave the go-ahead to convert the upscale furniture chain’s Chapter 11 case into a Chapter 7.
The company shut down on Aug. 26 after problems getting financing meant it couldn’t pay creditors or keep the doors, according to interim CEO Chris Moye. Companies today face tougher credit access and higher interest rates.
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On Sept. 8, when Mitchell Gold filed Chapter 11 bankruptcy, it suggested that unsecured creditors would be able to collect on their debts because it thought it was going to get funding to make it through the legal process. Financing would have helped it make good on customer orders, too.
But the bankruptcy was fraught with tension between Mitchell Gold and PNC Bank, its primary secured lender. PNC wanted the company to quickly sell assets to satisfy its claims, and it won that fight on Friday.
Some initially thought that Mitchell Gold co-founders Mitch Gold and Bob Williams might want to buy back the intellectual property. That’s still a possibility, but will be tough if they need to get a loan to do so.
Court filings reveal the customer fallout from Mitchell Gold’s collapse.
Monika Anderson said her May 2, 2023 order totaled $10, 727.75. Out $2,251.44, Linda Abel said information containing a filing date for claims reached her later than the stated due date. “That letter was not meant to reach me in time obviously,” Abel wrote, adding, “I am so disappointed in this company as I have been doing business with them for years. Please make it right and give me my merchandise or a refund.”
Tim and Betsy Triplett want their $5,903.38 furniture order that’s being held by Ryder Last Mile in a North Kansas City warehouse. They said delivery was attempted on Aug. 25, without notice. They attempted to reschedule delivery before the bankruptcy, but claim that the courier was instructed by Mitchell Gold “not to release any orders.” They also alleged that their order is being used as leverage to ensure that Mitchell Gold pays what it owes the delivery firm, according to their letter to the bankruptcy court.
How these claims will be resolved is unclear. The Chapter 7 liquidation lowers the chances that customers will get either their deliveries or a refund. A new trustee to manage the liquidation will oversee the sale of assets and how proceeds will be disbursed to secured creditors. It can’t be determined at this time if there will be anything left for unsecured creditors.
The Mitchell Gold + Bob Smith banner could live on as an e-commerce brand when its IP assets are sold.
