Norwalk Furniture creditors line up

NORWALK Norwalk Furniture Corp.'screditors may be out of luck. After Comerica, NorwalkFurniture's bank
Cory Frolik
May 24, 2010

NORWALK

Norwalk Furniture Corp.'screditors may be out of luck.

After Comerica, NorwalkFurniture's bank, recoups as much of its loan as it can -- estimated in court records as about $9.1 million -- there may not be much money left over for anyone else, said Louis Yoppolo, a trustee with the U.S. Bankruptcy Court.

"The unpaid claim of Comerica bank ... is secured by a variety of different assets. Right now I don't have enough hard data to make an accurate prediction, but from what little I know, I'm not optimistic there's going to be much anything there after the bank's valid, secure claim is paid," Yoppolo said.

Cash-strapped Norwalk Furniture filed for Chapter 7 bankruptcy earlier this month.

In an Oct. 3 filing in federal court in Toledo, the furniture company listed between $10 million and $50 million in both assets andliabilities on its petition.

The petition also indicates there are between 200 and 999 creditors.

The creditors have lined up to sue Norwalk Furniture for payment since the company shut down.

The company owes money for services ranging from fuel purchases to public relations assistance.

But those bills take a back seat to debt owed the bank.

Comerica will be paid first, and there is a chance it will not be paid in full. Then come the creditors -- maybe. If there is any money left over after paying Comerica, it may go instead to paying administrative expenses for Norwalk Furniture, Yoppolo said.

"There is a lot of things left undone for the company -- tax returns, pay role returns, pension plans that need to be terminated. It's a large and ominous undertaking," Yoppolo said.

Speaking of pension plans, in a somewhat unrelated filing in U.S. District Court, a federal judge struck down a motion earlier this month asking for an injunction against Norwalk Furniture.

The injunction was filed by the Steel Workers Pension Trust and sought to prevent the sale of the company's assets to new investors. The motion was part of a larger civil lawsuit, which claimed Norwalk Furniture had $37,707 in unpaid contributions and deductions to the Pension Trust, which contains the retirement savings of about 260 furniture workers.

In his ruling, Judge David Katz said the requirements were not met for granting an injunction. Katz, however, did grant another motion by the Pension Trust that asked to attach Norwalk Furniture's assets -- "including equipment, machinery and property" -- to any judgment to make sure repayment would be satisfied.

The motion in favor of attaching the assets states Norwalk Furniture "is about to convert property, in whole or part, into money, for the purpose of placing it beyond the reach of creditors."

The amount of money Norwalk Furniture owes creditors was not available Tuesday. Many of the business details will be answered in coming weeks as the case works its way through bankruptcy court.

Whatever the amount, the creditors are not in a strong financial position.

"There are more questions than answers at this point in time. I don't anticipate there being anything for the general creditors of the company. ... What usually happens is that the remaining creditors don't get a whole lot, but I'm hoping that's not the case," Yoppolo said.

As trustee in the Norwalk Furniture bankruptcy case, Yoppolo serves as an independent party that oversees the administration of the case.

Norwalk Furniture's lawyer in this matter did not return calls.