A federal bankruptcy judge has approved a Chapter 11 reorganization plan for Woodbury sofa-bed maker Jennifer Convertibles, the legal publication Westlaw Journals reports.
Jennifer and its affiliates had to show that reorganization could repay creditors at least as much as liquidation. Judge Allan L. Gropper, of the U.S. Bankruptcy Court for the Southern District of New York, in Manhattan, said Jennifer and all but one of the affiliates -- Hartsdale Convertibles -- passed that test, Westlaw reported.
The debtors "must either make payment in full to a small group of creditors of debtor Hartsdale Convertibles Inc. or supply an additional liquidation analysis for those creditors," the report said.
While it continued to do business, Jennifer Convertibles and its subsidiaries filed under Chapter 11 in July.
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 will 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, issued Nov. 26, "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 nationally and eight Jennifer Leather stores as of Nov. 24. Seven of their stores are on Long Island. It also operates six licensed Ashley Furniture HomeStores, including three on Long Island.
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