The Mitchell Gold Co. has filed a Chapter 11 bankruptcy in a Delaware court Wednesday after abruptly shutting down last month.
The luxury home furniture and decor retailer, which operated under the banner Mitchell Gold + Bob Williams, indicated that unsecured creditors should be able to collect from the bankruptcy.
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The company, which has received “indications of interest,” wants to sell off its assets or find a buyer. It is close to securing financing to float it through bankruptcy proceedings. Court documents state that company assets include leaseholds, equipment and intellectual property.
Though there’s no word on who might want to acquire the hard-hit, high-end home brand, rival RH seems like the closest fit. The upscale home furnishings chain and its brash CEO managed to weather the pandemic but recently ran into challenges plaguing most discretionary brands. Still, the company expanded into the hospitality space with RH Guesthouse, a tony boutique hotel in New York’s Meatpacking District.
This year, the home goods sector has produced headline-making bankruptcies, with mass-market players including Tuesday Morning and Bed Bath & Beyond falling on hard times. But in the case of Mitchell Gold, co-founders Mitchell Gold and Bob Williams might want to buy back the company’s intellectual property and give the brand a second chance if they can get financing in a tough credit market.
The company’s assets and liabilities are listed at $10 million and $50 million apiece, with 200 to 299 creditors hoping to collect. The bankruptcy came after lender PNC Bank N.A. cut off funding. Mitchell Gold hired Dalton Edgecomb, a senior managing director at Riveron, as chief restructuring officer.
The company owes nearly $11 million to its top 30 unsecured creditors, which includes suppliers such as foam vendors Carpenter Co. and Interstate Foam & Supply Inc., leather supplier Moore & Giles, Ideal Frames, Hudson Valley Lighting Group, Surya Carpet Inc. and upholstery firm Stone & Leigh. Transportation Insight, the company’s largest unsecured creditor, is out $3.9 million.
Some Mitchell Gold employees dispute the company’s claims that it notified workers about their job terminations in accordance with the Worker Adjustment and Retraining Notification, or WARN, Act.
Former employees Lindsey Price and Stanley White filed a lawsuit Thursday seeking class action status. They claim Mitchell Gold didn’t meet WARN Act requirements and are asking for 60 days of pay as well as ERISA, or Employee Retirement Income Security Act, benefits.
According to their complaint, about 700 employees were affected by last month’s hasty shutdown and Mitchell Gold’s alleged failure to pay wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 calendar days as required by the WARN notice. The complaint claims that Mitchell Gold also failed to make 401(k) contributions, and didn’t provide health insurance coverage and other employee benefits under ERISA.