LL Flooring Holdings Inc. is considering filing for Chapter 11 bankruptcy, Bloomberg reported, citing people familiar with the matter.
LL Flooring shares fell to as low as $0.53 per share on July 5 after Bloomberg reported the potential bankruptcy filing. Shares were trading for around $1.40 in the days before the report. LL Flooring stock was trading at $0.61 per share as of publication time of this article.
The Bloomberg report said a potential Chapter 11 filing could take place in the coming weeks as the flooring retailer struggles to keep up with high interest rates and decreased home renovation activity.
LL Flooring said in a statement on July 1 it believes its projected levels of liquidity may not be sufficient for this year’s third quarter.
“The company is in discussions with representatives of the banks that are party to the credit agreement regarding an additional liquidity reserve requested by the banks and additional modifications to certain provisions of the credit agreement,” the company said.
To improve cash flow, LL Flooring is working to sell its Sandston, Va., distribution center, the company added.
Days before Bloomberg’s report, LL Flooring CEO Tom Sullivan said in a statement, “LL Flooring is poorly run, desperate for cash and teetering on the brink of going out of business as a result of the current board’s failed leadership and sham sale process.”
Sullivan and his private equity firm, F9 Investments, launched a campaign in early June to get Sullivan, John Jason Delves and Jill Witter onto LL Flooring’s board. However, LL Flooring has been fighting the campaign, sending multiple letters and a presentation to its shareholders urging them to vote against F9’s nominees.
In May 2023, Sullivan’s firm made a bid to buy the company for $5.76 per share, but LL Flooring’s board rejected it, claiming it undervalued the company. Sullivan’s firm made a second bid in November for $3.00 per share.
LL Flooring received another takeover offer from Live Ventures Incorporated in May to acquire the company at $2.50 a share and is still in negotiations.
