Creditors for Jennifer Convertibles, the Woodbury sofa-bed company that filed for bankruptcy protection this summer, will consider a reorganization plan at a hearing Jan. 25.
While it continued to do business, Jennifer Convertibles and its subsidiaries filed under Chapter 11 in July in U.S. Bankruptcy Court, Southern District of New York.
Its largest creditor is supplier Haining Mengnu Group Co. Ltd, a Chinese manufacturer.
Under terms of the plan, Mengnu will own 90.1 percent of the stock in exchange for $14.9 million in debt and receive 30 percent of recoveries from a liquidating trust. Unsecured creditors will own 9.9 percent of the stock and 70 percent of the liquidating trust. Mengnu and other creditors will also receive the proceeds from a series of notes. Current Jennifer stockholders would be wiped out.
The creditors’ committee recommends that creditors vote yes on the plan.
Jennifer chief executive Harley J. Greenfield said in a statement with its most recent annual earnings report, “We intend to emerge from bankruptcy as a stronger company . . . We look forward to continuing to provide customers stylish merchandise at incredible values.”
Jennifer, which closed 69 stores in fiscal year 2010, owned 72 Jennifer Convertibles stores and eight Jennifer Leather stores as of Nov. 24, including seven on Long Island. It also operates six licensed Ashley Furniture HomeStores, including three on Long Island.
Read more of Inside Long Island Business