The parent company of Longaberger, the American manufacturer, and distributor of handcrafted wooden baskets and other lifestyle products filed a voluntary petition for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Northern District of Texas this week. The beloved company which is a subsidiary of CVSL and JRJR networks suspended operation nearly a month ago in preparation for the Chapter 11 bankruptcy restructuring.
Company Closure Due to Cash Flow Issues
At its highest peak, the Longaberger Company was reporting $1 billion in sales with close to 8,000 employees and over 45,000 independent distributors of its products. Drowning in debt, however, the company instructed its sales force in early May 2018 to discontinue taking orders. Representatives of the company were nowhere to be found at a court order judgment debtor exam last week. The purpose of the conference was to deliver information about company assets in a $2.1 million dollar judgment against the company won by the former CEO of the company. While contempt of court charges could have been issued and company assets frozen for missing the meeting, the bankruptcy proceedings will put a momentary pause on these actions. It could put the judgment money in jeopardy as well.
Longaberger’s Texas Bankruptcy
In bankruptcy paperwork filed with Texas bankruptcy courts, Longaberger’s parent company owes somewhere in the neighborhood of $1 million to $10 million in liabilities to some 100-199 creditors, and claims between $1 million to $10 million in assets. While many companies utilize the Chapter 11 bankruptcy rules to reorganize debt while staying in business, it appears that this is not the case with Longaberger and that a much-cherished household name may be disappearing for good.
Chapter 11 Bankruptcy in Texas
As a business, the bankruptcy code realizes that employees and the local economy, in general, are better off if you are able to stay in business. If you are a business owner or sit on the board of directors of a company that is unable to meet upcoming debt obligations, contact a Houston bankruptcy attorney with intimate knowledge of corporate turnarounds using Chapter 11 bankruptcy as a tool to restructure debt.