W-C in Bankruptcy, Seeking White Knight

-- Home Textiles Today, 9/15/2009 12:00:00 AM

At the New York Market —

Tabletop and bedding supplier W-C Designs has filed for Chapter 11 bankruptcy and is seeking a buyer after previous efforts to sell the company outside of bankruptcy fell short.

“We have a go-forward strategy. It is our intent to reorganize and go forward — and brands are very important to this go-forward strategy,” president Patrick McCullagh told HTT. “The company is showing new product at market this week.”

The Anaheim, Calif.-based company listed debts of $2.75 million and assets of $450,000. Among W-C’s top unsecured creditors is Manhattan Properties, manager of 295 5th Avenue, where W-C has a prominent, street-level showroom. Manhattan Properties is owed just under $270,000. WWRD Holdings Limited, which acquired the Waterford Wedgewood assets out of bankruptcy earlier this year, is owed just over $158,000 in royalties, and Calvin Klein Inc. is owed royalties of more than $143,000.

At the time of the filing on Sept. 9 in the U.S. Bankruptcy Court Central District of California, W-C had been unable to secure financing, the filing states.

McCullagh has put $130,000 into the company to help fulfill immediate-term obligations, court documents assert. In addition, W-C is seeking approval from factor CIT Group and the court to use funds claimed as cash collateral by CIT and McCullagh to fund operations.

CIT Group is asserting a senior secured claim of approximately $2.74 million against W-C’s assets, the filing states. W-C states it has $4.89 million in assets securing the agreement with CIT.

CIT Group holds a loan cushion of 78% of its loan balance to W-C after discounting the supplier’s inventory value by 35%, or $572,000, and accounts receivable by 25%, or $1.25 million, according to the filing.

A hearing date has been set for Sept. 15.

The bankruptcy was triggered by “the loss of a significant customer” as well as outstanding accounts receivable and the economic downtown, according to the filing.

W-C was founded in 1975. In addition to private label programs, it holds licenses to produce table linens and/or bedding for Waterford, Royal Doulton, Calvin Klein, Tabletops Unlimited, Gallery, Monique Lhuillier and Casa Cristina. In 2008, W-C was the fourth largest U.S. supplier of table linens, with sales of approximately $15 million, according to HTT’s Top 5 Suppliers report.

The company is owned by Ashling Corporation. Waterford Linens holds an 86.5% stake in Ashling and McCullagh a 13.5% stake.