LL Flooring Mulls Bankruptcy Filing as Home Renovations Slow

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(Bloomberg) -- LL Flooring Holdings Inc. is considering filing for Chapter 11 bankruptcy, according to people with knowledge of the matter, who asked not to be named discussing private deliberations. Most Read from Bloomberg The flooring retailer, formerly known as Lumber Liquidators, has struggled as higher interest rates curtail home renovation activity. Filing for bankruptcy could help it cope with dwindling access to cash and slumping sales. LL Flooring may seek protection from creditors in the coming weeks, a person with knowledge of the matter said. The plans aren’t final and could change. LL Flooring shares fell as much as 31% to about 92 cents after Bloomberg reported the potential bankruptcy filing. Company adviser Houlihan Lokey Inc. has been reaching out to potential investors about a deal to inject fresh capital into the company, Bloomberg previously reported. LL Flooring has been trying to sell a distribution center in Virginia in order to bolster its cash reserves, regulatory filings show. The company said last week it may violate a minimum liquidity rule under its asset-backed credit agreement as soon as the third quarter. LL Flooring is talking with its banks about modifying the credit agreement, it said. A representative for LL Flooring declined to comment, as did a representative with AlixPartners, which is advising the company on its operations. In the first three months of the year, the company saw its net sales drop 21.7% to $188.5 million compared to a year earlier. It cited a “difficult macroeconomic environment” and “brand awareness challenges” for its woes. LL Flooring has more than 400 locations. It changed its name from Lumber Liquidators in 2020 after it was forced to pay $33 million a year earlier to settle securities fraud allegations. (Adds share move in fourth paragraph.) Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.