Originally created 09/06/97

Levitz files for bankruptcy



BOCA RATON, Fla. - Levitz Furniture, one of the nation's largest furniture retailers, will close its stores in seven cities and seek bankruptcy court protection in an attempt to reduce mounting debt.

The company said today it will close its stores in Atlanta, Cincinnati, Salt Lake City, Houston, Reno, Nev., and Jacksonville and Fort Myers, Fla. The Boca Raton, Fla.-based chain did not say if any jobs would be eliminated.

Levitz has experienced declining sales, profitability and cash flows over the past several fiscal years.

It said it also would close a smaller satellite store in Fort Lauderdale, Fla., and another in Potomac, Va. The main Fort Lauderdale store was recently remodeled and remains a major contributor to the South Florida market, the company said.

The company said it expects to meet its day-to-day operating needs, including prompt payments of post petition invoices and to pay current employees wages and benefits on time.

Levitz filed its petition for reorganization under Chapter 11 in the federal bankruptcy court in Delaware.

"Chapter 11 reorganization will enable the company to continue the turnaround and repositioning efforts begun last year," said Chairman and Chief Executive Officer Michael Bozic. "It also affords us the opportunity to restructure the heavy debt load which has been consuming our cash flow ..."

Moody's and Standard & Poor's lowered their ratings for the company in October 1995, just two days before Montgomery Ward Holding Corp. said that it was calling off a proposed deal to acquire 19.6 percent of Levitz for $65 million. Last month, Montgomery Ward sought bankruptcy court approval to close 44 appliance and electronics stores.

In July of 1995 Levitz's longtime chairman and chief executive, Robert M. Elliott, retired.

Adding to Levitz's problems recently was a $10 million California lawsuit after undercover investigations found that Levitz salespeople often misled customers into buying credit insurance for their furniture purchases.

Last month California insurance regulators and four California district attorneys announced a deal under which an estimated 300,000 Levitz customers might be eligible for a refund.

Levitz was organized in 1965 as a Florida corporation.

As of May 31, it had a chain of 68 warehouse showrooms and 61 satellite stores located in major metropolitan areas in 26 states. Levitz pioneered the warehouse showroom concept by opening the first one in 1963 in Allentown, Pa.

Today, Levitz stores serve customers in 22 of the largest 25 metropolitan statistical areas.

In the fiscal year ending March 31, Levitz generated revenues of $966.9 million.