Home-improvement chain that faced ‘60 Minutes’ formaldehyde scandal may go bankrupt: report
A major US flooring supplier with more than 400 stores that weathered a “60 Minutes” exposé in 2015 alleging the company used unsafe materials is weighing a possible bankruptcy filing, according to a report.
LL Flooring Holdings – previously known as Lumber Liquidators – may file in the next few weeks, sources told Bloomberg. It is the latest company to struggle due to persistent inflation and cash-strapped customers.
The company’s sales have been steadily falling over the past few years – likely due to a consumer spending cutback on home renovations amid high interest rates and stubborn inflation.
LL Flooring did not immediately respond to requests for comment.
The flooring supplier’s net sales tumbled 21.7% this year to $188.5 million.
Company shares have fallen 53.5% to 60 cents over the past week since Bloomberg first reported the potential shutdown.
The supplier may seek protection from creditors in the next few weeks, Bloomberg reported.
Investment banking advisor Houlihan Lokey has been seeking out investors for a deal to supply the company with fresh capital, Bloomberg reported.
LL Flooring has also been trying to sell one of its Virginia-based distribution centers, according to regulatory filings, to boost its cash savings.
The company said it may violate a minimum liquidity rule under its credit agreement in the third quarter, so it is talking with banks about modifying the agreement, according to a Bloomberg report.
“60 Minutes” scandal
Lumber Liquidators – founded by Tom Sullivan in 1994 – changed its name soon after the company came under fire in a 2015 “60 Minutes” investigation that found large amounts of the supplier’s flooring came from China and contained high levels of carcinogenic formaldehyde.
The company agreed to pay regulators $33 million in 2019 to settle federal charges concerning the safety of its laminate flooring.
Sullivan began his company by selling wood out of the back of his pickup truck in Massachusetts. He negotiated directly with mills to cut out wholesalers from the process and bring lower prices to customers, according to Daily Mail.
Sullivan left the company in 2017 and has fallen out with the board.
